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Blockbuster Bankruptcy May Signal More Trouble for Old Media Distributors

Old media formats are struggling to keep up with the continued growth of electronic and online media formats and distribution, with newspapers probably the best known format facing destruction. It was something of a surprise when video and DVD rental chain, Blockbuster, filed for bankruptcy following a 20% revenue reduction last year, resulting in a half-billion dollar loss.

The strength of mail based distribution service, NetFlix, and the growth of kiosk-based services such as Redbox were cited as some of the reasons behind the loss. Blockbuster maintains similar services, in addition to their traditional store-based video and DVD rentals, but apparently trails their competitors in those areas.

Blockbuster is set to reduce its presence significantly to try and return to solvency, but it is following in the footsteps of Movie Gallery, which had 4,800 stores several years ago but was liquidated earlier this year. Blockbuster's 5,600 stores, thus, may not be enough to prevent the chain from recovering.

Smaller independent rental stores may have been run out of business with the corporate presence Blockbuster could provide but they also provided the means for renters to access more esoteric titles that independent stores may not have the resources to make purchasing cost effective. With all the remaining distribution options, the loss of a large video and DVD rental chain is not going to have as much impact as it would have even a decade ago.

26 September 2010

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