Rehoboth Blockbuster folds
Blockbuster isn’t alone. Vacation Video, an independent rental store near Five Points, went out of business two months ago. Bay Management, a Lynchburg, Va.-based Blockbuster franchisee, also sold its Ocean View store back to Blockbuster.
In its 2002 heyday, Blockbuster traded for $29 per share. With more than 5,000 stores nationwide, there was a store within 10 minutes of 70 percent of Americans. Since then, it has closed more than a thousand stores – the company lost more than 500 in 2007 alone – and saw its stock plummet to around $1.15 per share, roughly the cost of a cup of coffee. Sue Early, executive director of the Rehoboth Beach Film Society, said she regrets the loss of Blockbuster’s community presence.
“We had a good relationship with Blockbuster,” she said. “They complemented and reinforced what we did.” The rental store made an effort to stock films featured at the society’s annual film festival.
Early acknowledges the convenience of Netflix and sees the on-demand service as occupying a different role in the community.
“They both have a role,” she said. “It’s too bad there wasn’t a way they could join forces.”
Many attribute Blockbuster’s decline to the corresponding rise of Netflix. At the close of 2008, the on-demand rental company had more than 10 million subscribers, who pay a monthly fee. Over two million DVDs were shipped daily, circulating 46,000 of the 100,000 titles offered. Twelve thousand titles can be streamed via broadband internet. At press time, Netflix trades for $36.05 a share.
ForeSee Results, a consumer research group, gave Netflix top marks for online customer satisfaction in the eighth consecutive survey since 2005. Netflix spokesman Steve Swasey said his company focuses on breadth of selections and quality of service.
“This is a company about providing a great and convenient selection,” Swasey said.
Lewes resident Frank Mayhorn has used Netflix for three years.
“It’s the convenience factor,” he said. “You don’t need to make the trek to the store in hopes of finding the movie you want.”
For those who can’t wait for the mailman, rental kiosks issue another challenge to traditional video rental. At the Superfresh in Midway, shoppers can rent new releases from a DVDXpress kiosk for $1 per night. Manager Mike Sauers said the kiosk is well trafficked and popular among employees. Superfresh employee Jennifer Wardrup said she often rents movies on her way out the door and returns them the next day.
At the neighboring Staples, customers can buy a Flexplay DVD for $5, use it for two days, and toss it in the recycling bin. Manager Diane Danby said the system was popular with vacationers who don’t have to trouble themselves with a timely return.
Facing a host of challenges, Blockbuster is expanding its services. It offers Total Access, a Netflix-like on-demand subscription service that includes streaming movies. Blockbuster is piloting on-demand video game rental, as well as a kiosk system similar to DVDXpress. The company is also pushing into consumer electronics, offering DVD and Blu-Ray players. A recent bid to acquire Circuit City underscores its effort to diversify.
Blockbuster spokesman Randy Hargrove said that while the corporation is pushing outward, its focus remains on bricks and mortar.
“We’re competing in a bunch of different areas, but our stores remain very important to us,” said Hargrove. “They’re the center of our mission. You still have a lot of people who enjoy going to the store.” He said Blockbuster enjoyed its third consecutive quarter of growth in 2008, with a 5.1 percent increase in sales. He said Total Access accounts for only a sliver of the revenue.
Hargrove also said brand recognition would help Blockbuster retain its footing.
“Because of our brand name, we have the ability to compete,” he said.
As new ways to rent movies proliferate, rental stores are forced to change to survive. Even giants like Blockbuster are trying to expand their presence in a market crowded with competition. Swasey doesn’t think bricks-and-mortar rental stores have a place in the future.
“Netflix changed the way Americans watch movies,” Swasey said. “Video stores just can’t compete.”
