Movie Gallery (Hollywood Video) yesterday filed for bankruptcy:
Movie Gallery, which operates about 4,430 stores in the United States and Canada, entered a prenegotiated filing in Federal Bankruptcy Court in the Eastern District of Virginia.
In 2005 in an attempt to respond to the growing offerings online, they purchased (used debt) Hollywood Video and only resulted in more problems. I think this shows a distinct lack of understanding of how consumer preferences are changing. It has been no secret that driving to a store to get your second choice of video, then being charged late fees is not a satisfying experience, and given a choice consumers would abandon this in a heartbeat. Blockbuster however has an opportunity to reinvent itself in the digital delivery world and partner effectively. With 20/20 hindsight (and with enron not imploding) the building of a fiber backbone with points of presence to deliver last mile video on demand maybe a strategy. Blockbuster solves a last mile problem for many people that is currently only solved through downloading and playback or renting a DVD. Imagine if Blockbuster built a real back catalog digitally and could deliver any movie to any video ipod using marginal pricing….whilst making the movie companies happy……
