The first part of this case gives salient details from BBs history (see the following case for more detailed information). It then updates BB's situation from 2007-2010: Netflix stock selling at $70 per share, BB's at 30 cents per share, and BB's loss of $932 million from 2008-2009. In an attempt to respond to competitor challenges and to stave off bankruptcy, BB entered into an agreement with TiVo to bring On Demand service to customer through their TV top box, and signed agreements with major movie houses for initial releases of new films. They also attempted to rent videos on SD cards to compete against RedBox. Will this work or is it too late for any new, last minute strategy to save Blockbuster?
UPDATE: This information is not in the textbook:
• Blockbuster filed for chapter 11 bankruptcy on 3/23/10. www.usatoday.com/money/media/2010-09-23-blockbuster23_ST_N.htm
• Creditors ask that the chapter 11 reorganization bankruptcy be changed to chapter 7 liquidation bankruptcy on 2/3/11. www.bloomberg.com/news/2011-02-04/blockbuster-insolvent-bankruptcy-should-be-liquidation-creditor-says.html
• BB receives permission to auction itself off and use the proceeds to pay creditors on 3/23/2011. The sale may take place in early April. www.thenewstribune.com/2011/03/10/1578330/judge-expected-to-rule-on-blockbusters.html
If students have been following the news on BB, these questions almost become moot. In discussing this case, you will need to be specific as to whether or not you want students to focus only on the information in the case, or if you want to expand the scope of the assignment to cover recent events.
1. How successful do you predict that Blockbuster's recent moves (agreements with TiVo and major movie studios) will be? Please explain.
2. Can Blockbuster avoid bankruptcy and survive? Justify your response.
3. Should Blockbuster increase its entry into international markets where digital-on-demand technology is not yet available?
4. In what other ways can Blockbuster try to redefine its core business and pursue other options in entertainment or home electronics? What strategy would you recommend to save the business?