Blockbuster's Retail Operation and DVD-by-Mail Business Shutting Down USA Today
Pioneering video-rental company Blockbuster is being shut down. USA Today reports that Dish Network, which owns the company, has decided to close Blockbuster's 300 remaining U.S. stores by early January, and will shut down DVD rentals by mail as of mid-December.
Said Joseph P. Clayton, CEO of Dish Network: "This is not an easy decision, yet consumer demand is clearly moving to digital distribution of video entertainment. Despite our closing of the physical distribution elements of the business, we continue to see value in the Blockbuster brand, and we expect to leverage that brand as we continue to expand our digital offerings."
The company will retain rights to Blockbuster's huge video library, along with licensing rights to the brand name, the piece reports.
"Dish said it will focus on expanding its Blockbuster @Home business, a streaming service available to Dish pay-TV customers. Blockbuster On Demand, the company's streaming service for the general public, will also continue to operate," the report notes.
Dish bought Blockbuster for $320 million in 2011, as Blockbuster was coming out of Chapter 11 bankruptcy protection.
"Dish's plan at the time was to leverage its more than 1,700 store locations to offer in-store rentals that would complement Dish's other video offerings," the story notes. "'Cross-marketing and service-extension opportunities' -- possibly in-store promotions for Dish's packages -- were also mentioned by Dish at the time of the acquisition.
"But running the stores proved to be tougher than Dish's management anticipated, as video lovers continued to flock to Netflix, YouTube and other startup streaming sites and cheaper kiosk rental locations."
Dish has been shutting down Blockbuster outlets since the acquisition, along with scaling back the rental library.
"Its rental library was cut in half in the last year, down to 41.5 million titles as of June from 81.9 million a year earlier," the story reports. "Blockbuster's revenue fell to $120 million in the second quarter, less than half of [the] $253.3 million it generated in the year-ago period."