One might look at the rise and fall of Blockbuster as a portrait of the hubris of big business in action. The video rental chain dominated the market in the ’90s by having more copies of more titles than smaller stores, and financed the business with late fees and simple brute force.
But the business started to change a few years ago, and the company didn’t change with it. In 2005 Greg Meyer tried to get Blockbuster to install DVD rental kiosks outside stores, so that customers could rent movies even when the store was closed, and so that (as a bonus) the stores could shutter during what were traditionally the slowest operating hours, to save money.
Blockbuster ignored Meyer, Netflix and Redbox soared, and the blue and yellow chain lost market share at an incredible rate. But Meyer bought a significant share of Blockbuster stock, and now wants to save the chain, in part by using the exclusive 28-day exclusive rental window brokered with studios like Warner Bros.
The first part of Meyer’s plan is simple, reports Slate: aggressively advertise the fact that Blockbuster has big movies 28 days before other rental outlets do. Basic business, right? Make sure potential customers have something the other guys don’t.
The second part of his plan is similarly aggressive rebranding and repricing. Meyer’s plan would have Blockbuster charge $2 for the first two nights for older titles, then $1 for additional nights — close to the Redbox pricing plan. The idea is to encourage secondary rentals of catalog titles, which you’d currently have to pay $5 for five nights, just like with a new film.
Part of Meyer’s conviction is that he still believes in retail stores. That’s a good notion, I suppose — he thinks that as the chain sheds 1000 unprofitable stores the remaining ones will be more valuable — but I’m not sure that’s going to continue to be a viable option going forward. I like the idea of the community that can spring up around movie retail stores — I really like it — but I’ve never seen it much in action at Blockbuster. (Maybe I just haven’t been looking; I know a lot of Blockbuster employees are rabid movie fans.) Yes, the company has services like Netflix and Redbox that are starting to draw customers, but if the brick and mortar stores don’t attract customers, an even more drastic set of changes will have to take place to forestall bankruptcy.