Why didn't I see this coming?!
Shocking absolutely no one, Blockbuster today announced a net loss of $65.4 million in the first quarter of 2010, compared to a profit of $27.7 million in the same period last year. BB’s revenue dropped 13% to $939.4 million and same-store sales dropped 7.1%.
Update: Blockbuster shares dropped 20% after the news broke, falling to 39 cents per share in after hours trading
Blockbuster’s CEO, Jim Keyes, said the following about the results:
“It was certainly a challenging quarter, given the continued challenges we face as a company with liquidity and very aggressive competition,”
Saying that “freshness is important in movies,” Keyes touted the exclusive new release deals that Blockbuster recently signed with several studios as “crucial steps in achieving a brighter future for the company.”
How long can Blockbuster cling to its “new release exclusivity” lifeline? How much longer before people are picking the shelves of their local BB clean during a liquidation sale similar to the ones currently taking place at Movie Gallery/Hollywood Video locations?
(via Dallas News)
I think they’ll abandon ship and a few will sail away in the Blockbuster Express lifeboat.
If BB is counting on customers flocking to their b&m stores for new releases, they need to ‘recount’ their expectations according to the actual number of b&m stores they have left and the number of customers who are actually willing to pay a higher rental price to get a new release on day one. The closest BB b&m store to me is 15-20 miles away. Don’t think it’s much better/closer for many customers. BB b&m would have to be easily accessible/local to more customers who must have their new-release dvd on day one to truly rely on/benefit from their ‘new release exclusivity’ .
Not everyone is willing to wait like you RB. Some are willing to pay a premium to see the movie before it hits Redbox.
Having said that, BB will still declare bankruptcy some time this year. They need to in order to shed the underperforming stores in their inventory.
Again JS, you missed the point–point being I acknowledge there will always be people who must have, and therefore, are willing to pay a higher price for a new release rental on day one. HOWEVER, it is unwise for BB to rely on their ‘new release exclusivity’ at their b&m stores to save them from financial disaster when there are so few BB b&m stores left/available for even these must-have customers to access. Common sense tells me that even these must-have new rental customers will think twice before taking a 30 or 40 mile round trip to rent a new release dvd on day one, and then another 30-40 round trip to return that dvd. Just the price of round trips gas used coupled with the higher BB rental price might deter even the most willing BB must-have new release rental customer. And let’s not forget to add the 2 hours+ in round trip travel time to rent since you once stated the BB high price rental customers know their time is more valuable than the cheapos who rent at Redbox and are willing to wait 28 days for a new release. Bottom line, no matter how willing the BB new- release customer is to pay premium rental $ to have it on day one , what good is it when so few BB b&m stores are left to rent at for these willing new-release customers.
I’d say at this point BBI is not counting on much of anything. They are burning through cash at a much faster rate than many expected. The guillotine awaits.
Perhaps JS sees some great numbers in BBI’s quarter that everyone else is missing. That would be par for the course with the terrible numbers he saw for redbox in Q1. Coinstar shares are only up about 50% since redbox had such a bad quarter. :(
I think I might have said that bankruptcy was in the works for BBI. Not sure how you managed to interpret that as me seeing good numbers for BBI in the last quarter. Although you have proven to everyone that you view the world through a tainted window so I guess I shouldn’t be surprised that you can misinterpret such a comment.
Was sort of a tongue-in-cheek comment after the terrible redbox numbers – the same terrible numbers that drove up the share price up by 50% or so.
Speculation makes people do dumb things.
BBI was up over 50% too this week before Friday.
Those who refuse to learn from history are doomed to repeat it.
Cash in now.
LOL. BBI’s market cap is like $50mm and it is just about bankrupt so a 50% move in its price is almost meaningless. This is opposed to the much larger coinstar where a 50% move is more or less only achievable which a change in the fundamentals.
If your heretofore undisclosed insights into redbox’s truly poor first quarter results were so easily discernible you’d think the shares somehow would refelct your viewpoint. Instead the shares have traded dramatically higher. Odd isn’t it.
Sucker born every minute.
But you know the truth right?
It’ll set you free.
So will cheap prices at Redbox. Save more, live better.
A lot of Redbox customers are former Blockbuster customers that were mistreated and inconvenienced by Blockbuster too many times. That is why many are willing to wait versus setting foot in or doing business with Blockbuster ever again.
Movie rental prices can only go so low. Already Redbox is experimenting with higher rental prices; it’s only a matter of time before it’s rolled out nationwide. Coinstar is well aware that $1/night is not a sustainable business model. If BBI can right-size itself in BK and shed non-core ventures like Total Access and its On Demand and focus on B&M they have a shot at surviving. Meanwhile, NCR/BBE has an opportunity to pick up a lot more clients with a more-generous revenue sharing arrangement, which a higher rental price could accommodate.
I see you have mentioned this before, but I just don’t see that being the right move for Blockbuster at all. They are still the #1 name in movie rental, and backing off of the future would be suicide for them.
In addition, giving in and letting Netflix be the only game in town for by-mail rental would be a disaster for consumers. Of course, if they spun it off or sold it to someone who would keep it going, that might work, but I don’t know if anyone other than Blockbuster can even compete at all. Wal-mart tried and then got out of the business. Would they try again?
Anyway, you have some good points, but I just don’t see Blockbuster “backing down” and all but guaranteeing their demise as the B&M store continues to move into obscurity.
BBI doesn’t have a culture of innovation and will be hard pressed to compete in the businesses you would like them to remain in. Realistically I think one needs to question the odds of success in the non-store businesses. I think the only viable plan is to license the name out to more aggressive and tech savvy companies such as NCR. BBI had a hell of a run but the sun is setting on their empire. Still plenty of competition out there with or without them.
the reason they lost 20% is because a day earlier they gained 18% then after market closed they reported their earnings, and it was in line with the estimates. people were expecting to do better then they estimated and thats why it went up before the announcement then when they reported the first quarter they sold because it was not better then they expected. If you look at the last 5 trading days BB is up over 8%
I’m one of those customers that have a blockbuster store and redbox in the same shopping center. I have returned to blockbuster versus redbox due to the 28 day wait and the poor redbox customer service. Blockbuster by mail also is starting to have more selection of movies versus netflix. I subscribe to both versus paying more for blu ray on netflix where I can just add a 1 dvd at a time on blockbuster for almost the same and add access to movies netflix doesn’t have available or were previously available but now turn up as unavailable in my que. IS anyone else experienceing that problem with NETFLIX. the satus will change to unavailble and it will move to the saved section of my que. why is that?
It’s called competition! The more competition, the lower prices should go. Blockbuster has never cared about its customers; just the bottom line…PROFIT’S. If Blockbuster cannot complete with Redbox; then they should not be around. I’m tired of hearing about companies when they are on top of the world do nothing but think about how much money they can make from its customers. God forbid if we (the customers) benefit by saving a few dollars! I’m grateful for Redbox because, it lowered prices and consumers benefit. The way it should be! Blockbuster’s way of competing is by using its Viacom muscles to have an exclusive on new release for “x” amount of days. I don’t know how the government has not step in. I was a customer of both but no more. I will only rent movies from Redbox even if I have to wait “x” amount of days. LONG LIVE COMPETITION and Creativity!
I do enjoy BB online services especially since I live an hour away from the nearest store. However I’m just glad there is competition happening. As long as there is competition, customers will often get good prices and services sometimes.
Here is the thing! This past year I have found only a 4-6 movies I would be willing to pay to watch and only a $1 at that. 90% of movies are so horrible, language, sex, political correctness (lets have another 5’6″ 130lbs female take down another 10 or so 250lb well trained soldiers, please!) If you think I am alone in this take a look at the numbers of viewers from years past!
So good luck with movies for the future!
Redbox, Blockbuster Express, and Netflix are the future of the DVD/Blu Ray Rental industry, 28 day delay or no(BBE has no 28 day delay…YET). Blockbuster B&M is headed closer and closer to oblivion every day.