Blockbuster stores to close

The recently announced Blockbuster store closings will cut about 20% of the firm's stores. Blockbuster plans to replace them with kiosks and smaller stores in more densely populated urban areas. Blockbuster also has a Netflix-style subscription service, but will only one-fifth the customer base of Netflix. Based on my own experience, Blockbuster may have alienated too many customers with their outrageous late fees. They "eliminated" late fees two or three years ago, but replaced them by billing you for the full retail cost of the DVD if it was late. Once you returned it, they credited your account for the DVD, less a "restocking" fee, which, of course, is a late fee by any other name. In practice, the service being sold (watching a movie) is identical no matter which company you get the movie from. So the movie rental business is based 100% on the quality of service. And so this is why Blockbuster is losing--Netflix does not have the late fee baggage of Blockbuster, and Netflix service is great--so great, you don't even think about it. Watching movies may not seem to have much to do with economic development, but communities that don't have their eye on this ball will be losers later, in two different ways. High performance community-owned broadband is the only way some communities are going to get to watch movies over the Internet. Cable companies are just barely keeping up with the bandwidth demands now, but as more homes dump driving to the video store in favor of watching movies on demand, legacy cable and DSL networks are going to begin to influence where people WON'T live. That's right--young professionals don't want to live anywhere now where broadband is not available, and within a couple of years, they won't want to live in communities that only offer "little" broadband--that is, the low performance cable and DSL services. So attracting and keeping the right kind of workforce is a community broadband issue. The second issue is how broadband is changing retail. Video stores have served as anchor tenants in retail shopping districts, as the stores provide a steady and predictable flow of people to a shopping area. As the video stores disappear, what happens to those retail buildings? What happens to the rest of the stores nearby that relied on that traffic? In our broadband planning work, we continue to see too many communities clinging to a 1960s style of retail planning and economic development. Retail is going away entirely, but the combination of big box stores and the Internet has changed it drastically, and few places can lead with retail as an economic revitalization strategy--perhaps none can. Instead, communities need to think more broadly about how to put empty retail locations to new uses, including office space for entrepreneurs, start ups, and established white collar businesses. And the way to start that process is to begin placing duct and fiber in commercial and retail areas. Call Design Nine if you want help with thinking about your retail and economic development strategies.

Knowledge Democracy:


We quit using Blockbuster years ago, because of the fees. We started using Netflix, and it is the best creation for watching movies. One of our DVD's got lost in the mail on the return trip, and Netflix just removed it from our list of checked-out items and sent the next, since we had a good history of returning the movies (Blockbuster would never, ever do that). We actually found it later, it turned out that instead of sending it back, it fell between the seats of our car and got temporarily lost...but we mailed it back and called to let them know, they appreciated it. We still rent a few movies from Hollywood, but it's on average less than once per month. Paying $4-5 for one movie a month, versus $10 or $15 for nearly a dozen, the math doesn't work in any movie rental store's favor. For broadband issues, we got burned when we built our home. At first, Verizon said we could get DSL service based on our address. After building the house and working to set up the service, we were told that no, we could not get it. However, for the first year, we could pick up on our neighbor's wireless router...connected to Verizon's DSL. That was infuriating, and we still can't get the service. We used Citizens Mobile Broadband, and it worked great...then they shut it down. We were forced to go with Hughes Net, which works well, but the bandwidth caps are a major drag and prevent doing any streaming or movies on demand. We can't even do VoIP because of the time-delay issues. Even now, the best option we have is cellular-based broadband, and most of those still have monthly cap limits (Citizens did not, maybe that's why they shut it off). So, we're stuck with cruddy internet until someone invests in our community, which is not likely for the foreseeable future. We can't get gas service extended to us, or truly digital cable, or even why would we ever get Fios or some other high-quality broadband? Needless to say, we tend to do most of our major internet stuff at work, or at WiFi hotspots. I can completely see why that will influence residential settling patterns.