JULY 2, 2010 • Blockbuster Inc. avoided bankruptcy by winning a crucial one-month reprieve to Aug. 13 on debt payments to its creditors. The agreement couldn’t stop the retailer’s delisting from the New York stock, however. The retailer’s stock has been trading in the 20 cent range. With changes in consumer trends, and strong competition from Netflix and Redbox, Blockbuster finds itself with losing market share, total debt near $1 billion, and interest payments it has trouble meeting
Impact: Blockbuster is one of the best examples around of why it can be difficult for an existing company to change with the times. Netflix was a venture funded startup and it would seem that Blockbuster should have had no problem competing on its mail order distribution model. Unfortunately the company was too weighed down by its reliance on brick and mortar retail stores to change its ways. We wonder how much of the Blockbuster scenario will play out for existing packaged goods distributors in the game space.