Unfortunately, the last movie ever rented in a Blockbuster happened last Saturday in Hawaii. Blockbuster has officially ended all store rentals and will close its remaining 300 shops by early January. The company opened in 1985, lasting 25 years.
Blockbuster filed for Chapter 11 bankruptcy back in 2010, claiming $900 million in debt and mounting losses in its movie division. During this time, its competitors Netflix and Redbox made their way to the top. A year after filing for bankruptcy, Dish Network bought the company. Dish Network will now focus its attention to the Blockbuster On Demand streaming services.
Even a successful chapter 11 bankruptcy would not have saved the decline of Blockbuster. The main purpose of a Chapter 11 is to allow the business owner to retain their company and continue doing business, while resolving their debt. There are usually two methods. One method is for the business owner and their creditors to agree upon terms for a reorganization, which can include selling some of the company’s assets to cover debt. Another method is for creditors to be granted equity in the company itself.
In this situation, there was nothing the company could have done to get people to keep renting movies. Technology was rapidly changing and Blockbuster was too late to make the change. Blockbuster’s huge investment in traditional stores made it slow to realize the Web’s importance. Blockbuster even had the opportunity to buy Netflix back in 2000 for $50 million, an offer they would happily make now. Sadly, the nights of wandering the aisle to pick a movie will be considered a burdensome pastime to future generations.
Read more about our bankruptcy services…