In the wake of yesterday’s revealing regulatory filing from Blockbuster that hinted at possible bankruptcy, several industry analysts have voiced their opinions on the issue. John Kraft with D.A. Davidson & Co. feels that a bankrupt Blockbuster would drive traffic to Redbox kiosks, while Needham analyst Charles Wolf thinks that a new story in BB history could begin with Chapter 11.
A Boost to Redbox?
Kraft believes that should Blockbuster enter bankruptcy, it would be compelled to close even more retail locations. Such a move, combined with the massive closures of Movie Gallery and Hollywood Video stores, would inexorably push consumers to Redbox kiosks. Said Kraft:
“We believe Redbox has an opportunity for significant market share gains at the expense of the brick-and-mortar players,”
Bankruptcy a Boon for BB?
Needham analyst Wolf is of the opinion that Blockbuster will be unable to get out from under a crushing debt load of nearly $1 billion without filing for Chapter 11 protection. A slimmed, restructured post-bankruptcy company more focused on the by-mail and on-demand sectors would be a positive scenario, in the analyst’s opinion. Said Wolf:
“A voluntary [filing] would enable Blockbuster to reduce its debt burden and interest payments to manageable levels and [allow it] to implement its strategy for closing underperforming stores and building a digital distribution business . . . I can see why management is contemplating it.”
Your turn to sound off, Insiders. Are these analysts correct in their assessments? Is there any hope for a post-bankruptcy Blockbuster? Will Redbox reap extra business from the bankruptcy of its blue rival? Would the demise or massive downsizing of a major Redbox competitor be in the best interest of the video renting consumer?
(via Home Media Magazine)