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
    Nick, 26 Apr 2008 @ 5:52am

    Blockbuster and Circuit City

    Brooks just nailed it. All companies have to change their original concepts and ideas in order to grow and survive. Provide home theatre studios inside the store to preview or show full length movies to the public or for private screenings for small groups. Theatres are too large for this so it is a great idea. CCS has been going downhill since BestBuy came on the market, they stuck with original ideas and their own arrogance has led them to failure. Blockbusters competition is NetFlix, they have been struggling but they also realize the need to change and that there is value in the brick and mortar. Blockbuster is on the right track with this one and if CCS leadership was smart they would grab it now and work out a partnership. Problem is that the CCS board continues to show their arrogance and their lack of leadership, they continue to think they can make it on their own. The board needs to wake up and smell the coffee, BestBuy beat them at the original game long ago.
    There is a very powerful group behind the plans for Blockbuster. Consider the partnership that has formed between Blockbuster and Mark Wattles(formerly Hollywood Video). Wattles did not become the third largest shareholder in CCS to lose money, he did it to gain control and start paving the way for Blockbuster, and he is putting enormous pressure on the CCS board for changes and resignations. Blockbuster decided to make it public that they have a bid for CCS because they cannot get the CCS board to move on their. Blockbuster has had the plans drawn up for this one for some time now, they just needed the right time to pull it off. Mark Wattles is the key, and Carl Ichan can finance the entire project. There is a showdown brewing at the upcoming CCS stockholder meeting....put this alltogether and you have the makings of the first movie that "Circuit Buster" can preview in their newly acquired home theatre studios. I can't wait.

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