Blockbuster, once a high flying video rental company, may be in its last days if it can’t complete a financing deal it is working on.
The death knell may be ringing for Blockbuster. Today the video-rental giant admitted that if it cannot complete the financing deals that it is currently working on, there is a good chance the company may be forced to shut its doors. While the company last week said it was in the process of getting a $250 million revolving loan from creditors, that may be in jeopardy.
Why? The loan apparently has some conditions to it, and Blockbuster is now not sure it can meet them. Even worse, whether the loan goes through are not, it is not even sure that would be enough to save the company.
Blockbuster is a great case study in how even dominating companies can get disrupted as described in clayton christensen’s innovators dilemma. I predict many giant media companies to face this fate in the coming few years.
Great post about the innovators dilemma, they should have purchased netflix back when they had the chance for 50 million.
Comment by takis — April 7, 2009 @ 2:54 pm
In retrospect that makes sense. But there is a good reason why even the smartest companies get blindsided by disruption.
Blocbuster didn’t buy them because of what seem like perfectily good reasons at that time. They would have worried about conflicts with their high margin cash cow in store rentals. Companies are always worried about protecting their current revenue streams and this is what makes it diffucult for them to adapt to disruptions. This is happening now in the media businesses.
Also, if blockbuster purchased netflix that early, netflix may not be what it is today.
Comment by Raja — April 8, 2009 @ 8:23 am