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Blockbuster death spiral: Canadian stores can’t escape the Netflix effect

Blockbuster Canada is now in receivorship (Image: Jonathan Swafford)

Though we’ve been hearing for months that the Canadian arm of bankrupt U.S. movie rental giant Blockbuster Video has been doing just fine, it was put into receivership by court order yesterday. Apparently, despite the fact that the Canadian branch is still a functioning business, the assets are being shut down and sold off to pay back the American company’s creditors. Of course, there’s but one competitor to blame: big, bad and oh-so-wonderful Netflix.

The Globe and Mail has the story:

[Blockbuster] is now on the block—its 400-plus stores will be kept open by receiver Grant Thornton Ltd. as it pursues a sale. Employees have been told they will now be paid weekly instead of bi-weekly [and] have been issued their vacation pay and told not to sell gift certificates for the foreseeable future.

“The company’s stores are open for business,” the receiver said in a statement. “The receiver expects to initiate a process in the near term to identify parties interested in purchasing Blockbuster Canada’s enterprise and assets.”

Sure, the doors may be open for business, but it’s difficult to imagine who would want to buy Blockbuster Canada in a world where Netflix is offering a whole month of unlimited viewing for roughly the cost of a single DVD rental. Even in Canada’s ridiculous Internet market, where Netflix downgraded its video signal in a bid to keep customers from going over their monthly bandwidth caps, the future for big box movie rental stores remains bleak. All the same, we’re a little concerned that a functional business is being auctioned to pay American movie studios. Apparently, suing Internet pirates just isn’t contributing to the bottom line like it used to.

At least in Toronto, the market for smaller, indie stores seems to still be strong. Queen Video is going gangbusters, and there are other, similar success stories from around the city. For those who still want to talk to actual humans—we know, shocking—about the latest obscure French film, this might be a business model for the future. Until Netflix allows customers to Skype with film nerds across the planet, of course.

Blockbuster Canada pushed into receivership [Globe and Mail]

  • Ria

    unbelievable!! As if jobs are not hard enough for students seeking pt work at various times of the yr now this! I was not at all impressed with Netflix and ended my paid subscription to their service because many of their movies are very old and TV series shows also outdated and uninteresting!! I will definitely miss the stores and those employees will definitely miss their jobs!!

  • Anonymous

    Pretty sad how even after clearing a half a billion profit in 2010, that the company is being destroyed by its american counterpart. After running up a 70 million dollar debt while they were in chapter 11 to ensure they still got their product, the US branch just dumps the debt on Canada’s head. Perhaps the US stores should have liquidated so that the stores north of the border could continue to make money for the studios?

  • Jeremy

    Huh?

    You are right…We should keep stores around so people like you can still spend 7 bucks on a new release rental.

    As a nation jobless claims remain volitile but to blame Netflix is nuts. The blockbuster model may employ more people but it’s expensive. Why are people not thanking Netflix for producing a product and model that is affordable and easy to access?

  • levi walsh

    i work at blockbuster and it sucks having to worry about when a store might close and sure netflix might be 8$ a mont but u dont get the new realeses when they come out and i gaurentee when blockbuster is gone that 8$ a month will prob go to 20 or 25$ a month

  • jtz

    I look at it this way. Netflix may not have updated movies but don’t get mad at me because I refuse to spend money on Blockbuster. I still want to watch movies and I don’t want to pay an arm and a leg for no movie. What you think I’m made of money? If gas prices are high and food is high, and the goverment wants the middle class to pay for everything, of course Blcokbuster and Cable are going to see a change in sales because someone (Netflix) understands people ain’t rich. I still wanna go on vacation every summer cutting the cord and not going to Blcokbuster makes my vacations easier. Of course you gotta think of the price to fly; as a result,not buying a blockbuster movie makes me able to fly and enjoy my vacation. Thank you Netflix. And what you Blockbuster fans worried about Dish bought Blockbuster and is going to be doing some video streaming anyway.

  • emailz

    Best argument I have ever read about this situation. All the prices on everything is going up. But people still want some form of entertainment, and netflix is a not just an alternative source of entertainment, it’s CHEAP. Even if illegal downloads are simple clicks away, netflix is cheap enough to be legit and worth paying for. I hate to say all of this because my family has had mom and pop video stores since I was about 6 years old (I am now 32) and I know (even if my dad refuses to accept this) I’m just waiting for a new song to be release “Streaming killed the video store”.

  • boom

    There is nothing wrong with a little bit of competition. I know for the store that i currently work at, when netflix came out it had no affect on the store.
    Blockbuster has unlimted older rentals for 9.99 as well, similar to netflix.
    there is still a market out there for people who like the instore experience.
    with that you are going to pay more for your rentals. this is due to the fact that in the store you are helping pay for the rent, and pay the people who help you find the movies you are looking for. Call me old school… but for myself i prefer to go into a store then watch things online, or shop online. There are many people in Canada at the moment who still prefer this, and this is proven by the half a billion dollars in revenue last year that blockbuster canada made.
    The Canadian blockbuster got screwed from bad management in the states… and unfortunatly there are going to be alot of people who are stressing out about where they will be if blockbuster canada doesnt get sold.

  • jtz

    Also, why drive to BEST Buy with gas prices the way they are to buy some CDs or DVDs? I can purchase movies on Amazon or songs on Itunes. I just purchsed it without DRIVING AND USING GAS. I’m a Best Buy customer and I havent’ been there since gas prices reached over $3.00 a gallon (I used to shop there every month). I”m trying to save money not spend money on retailers just to save the economy. If you want to save the economy lower gas prices and I’ll be one of the ones to shop like I used to by drivng to Block Buster or Best Buy. Also the real threat isn’t just netflix. Videostreaming devices like Roku, Apple TV, Boxx ect. I have one of those devices. If I’m sick of watching repeats on Netflix, cancel it and view another channel like Amazon. You guys also need to notice another threat cable has chagned. HBO Go is also going to keep people from going to Block Buster so is Comcast and UVerse. Duh. Blcok Buster needs to get into what is popular today. That’s why they are hanging on to the string. Block Buster is old fasion.

  • jtz

    Video Streaming is so popular some say in another 18 years, DVDs will be gone. You don’t even have to watch movies on a computer screen. It is on XBox, Sony, Apple, Box, Roku, over 250 devices all connected to your TV set. I hear that HBO Go is trying to get into some devices like Apple. If Comcast puts HBO Go into one of Roku’s channles. I’ll subscribe to it too. That would be Sweet. They have Epix, and Sony’s own Channel Crackle giving you free movies. As long as I save money. I’m not about to spend money on Blockbuster and make me broke just to help the economy. Oh yeah I hear AT&T put a cap on the internet. AT&T is only hurting it’s self. There is on way I’m going to buy UVErse and have a limit on how much I can watch or pay $10 more. People are acting like it’s all netflix. Redbox is also going to start streaming. And the best part of it is, I can watch new movies without drivng to Blcokbuster. What Netflix doens’t have another will have available online. So I’m not messing nothing.

  • firechick

    Netflix has nothing to do with Blockbuster shutting down. It was bad management plain and simple.

    There are vast differences between Canada and the USA regarding technology/telecommunications product and services.

    It is so many factors that affect why Blockbuster in Canada is successful and Netflix is not.. yet.

    We are not a drive-through Banking/shopping/order online/drive everywhere/eat fast/eat processed society in major cities in canada still. We enjoy our neighborhoods, we enjoy to go out and do the simple things such as go to the local fruit market, walk to the corner store and get a gelato and browse a movie store.

    Our Telecommunications/Internet/television world has always been monopolized and expensive. We do not have the capability yet to even come close to the advanacements of the US and the selection. We have a handful versus their thousands of choice.

    Entertainment costs money regardless – we can bitch and complain too expensive but honestly.. what else do you waste money on that is too expensive! Cable for pity sake is 300 channels of crap majority of the time. Blockbuster also tries with so many programs to give more benefit and Customer service ..

    which leads me to next point.. You really think Blockbuster employees do not know Foreign films or they just blinded by big names only? Give me a break.. majority of the employees are students in the industry that KNOW or INTERESTED in film. Take a look first, go talk to the staff and see on majority of the shelves in the Blockbuster stores in Canada in comparision to (once was) blockbuster USA.. It molds to the society and you will see local movies to Festival films and try to assist them to get know aka their Hot docs selection.

    I like going to a video store, browsing with my family and reading the covers the are in my hand to choose my entertainment for the night. The old sterotype that Video stores are dead is a far away pipedream still and Corporate names still employ people and that matters – Whether it is an employee at a small movie store or a Blockbuster – they are still someone who is working there and has a love for the industry.

    Also.. Want to rant about videos and the industry.. Rant about Illegal copies sold everywhere.. ya, it is cheap but ANYONE in your life that you know in the industry that you are taking out of their pocket cause you are buying a burnt copy of the movie they were a Grip in? Support the industry, support the circle of friends that are actors and actresses, producers, animators, cameramen,musicians etc.. Support them and stop buying the cheap-ass Burnt copies from Pacific mall and the guys wandering the streets!

  • Chris

    Anyone seen the movie Wall-e? See those overweight, anti-social humans flying around space having everything done for them bu computers and robots? We’re well on our way to that reality. Right now we can download movies and music. We can get our groceries online and delivered to our doors. We can shop for our clothes,furniture, etc…without taking a step outside! Kids today spend 90% of their free time on their computer or game consoles. Screw Netflix and the like. Get off your couch, get some air, and actually socialize. Remember…you didn’t get that beer gut walking to Blockbuster!

  • jtz

    Will if majority of Canadians still rather go to the video store why is Blockbuster in trouble? And why are more Canadians going to netflix? They had an increase in sales. And why you keep saying computers? Next generation Television is going to be more for the Internet. Tablet PC that cost over $700.00 has Netflix hell Apple has Time Warner. If I’m going to pay that much for a Tablet PC I better be watching Netflix and Hulu Plus. I want my monies worth. If you buy a PS3 or XBox and they have videostreaming and you not using it the you wasted about 30% of your money. I’m I’m going to be buying new tech and not using every feature.

  • Dave

    Ha ha blockbuster fails! As for Netflix though, it’s pretty insane how many movies they have. Unfortunately most of them are unknowns. Any Canadians out there looking for good reviews though can check out http://www.netpixpodcast.com for a podcast that discusses movies available on watch instantly.

  • Rex

    Those reading “JTZ’s” comments should take them with a grain of salt. He’s stating (and restating, and restating) the obvious when he says that entertainment is moving toward a stream/download model, and he’s right that Blockbuster is in trouble, though he seems to deny that this is almost entirely because of the massive problems in the U.S. chain, and not the direct result of dwindling Canadian renters. Granted, no Blockbuster is as busy as it used to be, but in many smaller cities (remember, Toronto isn’t everywhere else), Blockbuster is still a VIABLE source of entertainment. I’ll admit their pricing structure also works against them against the online equivalents, but as I write this, THERE IS NO ONLINE SERVICE IN CANADA THAT COMES CLOSE TO OFFERING THE SELECTION OF MOVIES AVAILABLE AT THE AVERAGE BLOCKBUSTER, particularly new releases and especially foreign cinema, which a LOT of people watch now, moreso in big cities where many in the population speak other languages besides (and HOPEFULLY in addition to) English.

    Seriously, have any of you really LOOKED at the selection at Netflix? I mean REALLY LOOKED at the selection there? It’s crap! Oh, sure, there’s some good-quality productions there in terms of movies and TV shows, but there are NO new releases, barely anything from the past couple of years (unless it was a theatrical dud or got cancelled on TV or has been out on DVD for so many years that nobody even cares about it anymore except po’ people like “JTZ”. When the service first started up in Canada, I was stoked (BIG TIME!!), but then a couple of friends signed up and I’ve visited them regularly over the months JUST TO SEE HOW MUCH NETFLIX EXPANDS. Well, guess what, it expanded alright, but sooooo slowly it almost makes me cry.

    And bringing up services/devices like Boxx, AppleTV and Hulu (ESPECIALLY THIS ONE) in a Canadian context is a fucking JOKE! Oh yeah, they may be the model of the future, and I EAGERLY AWAIT THAT DAY, but compare their selections in Canada — if you can even USE them in Canada, which you CAN’T in some cases — against what’s on offer to our American neighbours, and it’s enough to make you cry. The American Hulu has probably THIRTY TIMES the amount of content available, probably more, and the paltry scraps we get here do NOT justify the price to anyone who considers themselves a serious consumer of movies, TV shows, sports, etc. I suppose if you’re young and ignorant of just how much entertainment is out there, or you don’t mind watching FIFTEEN YEAR OLD FLOPS like Last Action Hero, well, then maybe such a service is for you. But if you like to keep up on the latest TV shows or movies from ALL OVER THE WORLD, then you’re stuck with Blockbuster or, as others have suggested, your local library, which is HANDS-DOWN the best stocked video service in the entire city! I’ve been stunned at what I’ve been able to sign out there for FREE! I even managed to scratch the vast majority of the Criterion Collection off my “wanna-see” list thanks to the TPL. Amazing, but obviously it won’t last forever . . . :(

    So, JTZ can testify all he wants, but the sad fact is, he’s MORE LIMITED IN HIS CHOICES simply because he chooses to use online streaming services, assuming he uses the LEGAL methods, that is. Mind you, if he buys bootlegs (such as those at the aforementioned Pacific Mall, where you practically have to engage in a pathetic CRACK DEAL if you want to get a “95%” copy of a new American movie, while they happily cannibalize the Asian film industries IN PLAIN SIGHT with no consequences), then maybe he’ll get more than one vacation this year.

    THIS COUNTRY SUCKS when it comes to adapting to new technology. It’s no wonder Americans are abandoning video rental shops, broadcast television and even cable and satellite. I’d bet most Canadians would love that opportunity, but you can bet your ass we won’t be doing it any time soon, and those of us who do, like JTZ, are delusional if they think it’s anything APPROACHING a decent alternative at this point in time.

  • Eddy

    Blockbuster Canada makes money.The parent company allowed the studios to put a lien on Blockbuster Canada for the money owed.The canadian stores will be sold and the buyer will invest money into the company that Blockbuster does not have.Lots of potential here for VOD,self-serve kiosks,by-mail program.The buyer will spend money for advertising which will draw people back into the stores.The Favourites Pass program costs $10 per month and you can take out a video every single day!!!That is good news which needs to be spread.Blockbuster will close some stores and be much stronger both in Canada,the U.S. and globally!

  • Jenny

    We need a Canadian run and operated version of the netflix video service here in Canada. Netflix sucks majorly for Canadian customers. It could be years before we even see a single Star Trek episode on Netflix and the Americans just got every Star Trek series. Too little of interest on Netflix Canada, and yet somehow they’re running our video stores down. How? Who even watches Netflix in Canada?

  • sandpalm

    Hey boom, which store do you werk at? My local BB is no longer doing the 9.99 favorites. (still saw it a few weeks ago) All they got is $14.99 for 4 which is still pretty expensive for old movies!

  • M

    For the past few weeks I’ve been reading ALOT of people’s comments on their feelings of Blockbuster Canada’s fate.(some hoorays here and some boos there) Let me tell you my opinion.
    I am a mother of 3 (one of which is special needs) and work at Blockbuster. The reason I work here is because with one of my kids needing extra care my husband and I would prefer not to have our kids left in daycare and truely can’t afford the higher costs daycare expects for her care. So my only option was to work nights. This is where Blockbuster comes in. It works around my schedule and allows my husband to work days and me to work nights with a paycheck that isn’t all that bad. I know this might not mean anything to a few of you but I am just 1 of 4000+ stories of BB employees most of which are struggling students or parents just trying to feed their kids.
    From my understanding BB Canada was in great shape until once again a US company threw us under the bus. Just ask the employees of Linens and Things, just 3 yrs ago they closed all the Canadian stores to save themselves.
    Canada Netflix newest movie is Date Night that is about a yr old. Most of our customers have tried Netflix here and don’t like it. (probably because there is no new releases AT ALL)
    From working at BB I have gotten some amazing training that won’t make it so hard to find a new job so I am not so worried about that as I am SO disappionted to realize that I won’t be walking my family up to the local BB to pick up a movie. I AM CANADIAN… I don’t like IMing my friends-I like to here their voice, I don’t like shopping online-I like to ask an associate if my ass looks fat and call me old fashioned but despite the changing tech world I still enjoy human contact!
    I wonder what kind of people sit behind their computer and judge a company who did do well financially without actually educating themselves on all the facts. BB Canada’s “parent” company sold them out.

  • Garon

    Netflix Canada unlimited streaming is crap movies. No new releases at all. Get your facts straight.

  • stacey

    As an employee, articles like this make me mad. As of right now, BBV Canada is being sold to cover for debt accumulated by the US company. It has nothing to do with Netflix or illegal downloading in this country. With 400 stores nationwide (compared to thousands of US locations) we were still profiting and had millions in liquid funds. Unfortunately, they made bad business choices and signed as a guarantor for the US, meaning the US could remain open and restructure. Now 1400+ employees are paying because BBV US needed Canada to bail them out, and because the debt is greater than the funds openly available, we’re being sold off. Why the US and DISH don’t inherit the debt is beyond me, its theirs in the first place.

 

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