Can Blockbuster Turn Its Stores Into Destinations?

from the worth-a-shot dept

Blockbuster clearly knows it's facing mounting challenges to its business. The company has been mostly outplayed by Netflix in the online rental market (though, Blockbuster's competing offering has done much better than some others who have tried to play the Netflix game). The company's financials have been a bit of a mess, but it's still planning for the future -- and that includes recognizing that the market is changing drastically, and it needs to change with it. While no one knows if it will be able to survive these changes, it's still rather refreshing to at least see the company try to meet those challenges head on. Recently, it's talked about a strategy to create its own set top box as well as put out an unsolicited bid to buy Circuit City. While both ideas have some problems (the Circuit City acquisition would be particularly hard to pull off for example), it does show that the company is trying to branch out.

What may be even more interesting, though is that Blockbuster clearly recognizes that it has an asset in its brick-and-mortar stores that Netflix can't easily copy. While some may say that the stores are a liability, that may depend on what Blockbuster can do with them. Already, it tries to leverage the stores in its online rental service (allowing you to return movies to the stores and immediately pick up a new film as part of your subscription), but as Gizmodo points out, it's also experimenting with making the shops into real destinations, rather than just rental shops. It's playing with a few different "formulas" to see how people respond -- including setting up a bar where people can buy soda or coffee and another where there's free WiFi and people can play video games on a big screen. It's also testing out setting up a store where shoppers can buy consumer electronics. You can consider that last one a test run for what would happen if the Circuit City deal goes through.

Turning the stores into more of a destination, with a variety of options on ways to make money off of the customers is a necessary strategy -- though, it's hard to pull off well (so, at the very least, it's good to see the company experiment before rolling something out nationally). Sam Goody, the big record store chain, tried to do something similar a few years back, and it didn't work out all that well. A large part of the problem may be really convincing people that it's a worthwhile destination. This is one case where the company's reputation matters, and Blockbuster's reputation isn't great. Still, this is the right strategy -- though, success or failure is very much dependent on the execution, which isn't exactly Blockbuster's strong suit.
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Filed Under: destinations, movie rentals, retail stores
Companies: blockbuster


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  1. identicon
    angry young man, 26 Apr 2008 @ 6:29pm

    blockbuster and radio

    Blockbuster's business model is, as Matt Bennett aludes, little different from that of Top 40 radio. It thinks we all want to see the same limited selection of, well, blockbusters, so they only need to make those available. There doesn't need to be any intelligence behind their inventory; the ads in Variety do their choosing for them. And just as the internet showed that people want all sorts of music, not just that foisted on people by the major record labels, NetFlix exposed the desire people had to see the most obscure movies ever, and Blockbuster simply can't compete with NetFlix's ability to supply everything. Blockbuster just hasn't figured this out yet. People don't want convenience, coffee, or electronics and they certainly don't want the advice of the morons that Blockbuster hires. They want selection, and they want the advice of likeminded people. Blockbuster deserve to go under.

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