McFeatters: The death of Blockbuster rental stores
Wall Street's eyes were fixated Thursday on Twitter's initial public stock offering, which initially was priced at $26 a share and briefly hit $50.09 by midday. That's not bad for a company that has lost roughly $300 million in three years and isn't expected to be profitable until 2015.
While Twitter's investors were reveling in gauzy dreams of great things to come, another former darling of the tech crowd was dying a quiet and largely unnoticed death.
This week, it was announced that about 300 Blockbuster stores will close by early January and the company's DVD-by-mail service also will shut down. Fifty franchised locations will remain open in the United States, although their fate is anybody's guess.
Roughly a decade ago, Blockbuster had 9,100 video-rental locations around the country. It played a major role in changing how Americans spent their evenings, eating pizza and watching a rented movie at home.
But video-streaming and subscription services eroded Blockbuster rentals, pushing the company to close thousands of stores and land in bankruptcy court in 2010. Dish Network Corp. scooped it up the next year for $234 million and aimed to take on upstart Netflix Inc., the Associated Press reports.
But Netflix was far ahead in the business of digital-entertainment distribution. It now has 7 million DVD-by-mail customers and 31 million Internet video subscribers and a market valuation of $20 billion.
Though Blockbuster posted an operating loss of $35 million last year and another $4 million for the first half of this year, according to the AP, there's still a market for Blockbuster. That's apparently sufficient for Dish Network to keep the Blockbuster name alive for an Internet video-streaming service.
For a change, a company's problems can't be blamed on the economy. Instead, it was a marketplace that changed while the company failed to.
Dale McFeatters is a nationally syndicated columnist.