Blockbuster/Virgin Megastore

This blog: http://kpatel53.blogspot.com/2009/03/blockbustervirgin-megastore.html discusses the business prospects of Blockbuster and the Virgin Megastore. The blog states that both of these companies are failing due to the fact that they did not adapt quickly enough to technological advances. These companies have outdated business models. The internet has added a new dimension into buying or renting media products. People are finding it convenient to buy products online with a cheaper price.

When I first read the blog, I did agree that purchasing music and downloading movies online had become so much easier with technology. I did not see how Blockbuster or Virgin could avoid bankruptcy for much longer, especially now with people spending less money on luxuries or outside entertainment due to the current financial crisis. However, I do not agree that Blockbuster has an outdated business model.

They have tried to keep up-to-date with the current technology. First, when NetFlix launched its online rentals up to 8 for as long as you want, Blockbuster had to retaliate. They adopted a "no late fees" strategy at its retail stores and offered a very similar online rental service starting in August 2004. -Reviews
I also found a chart comparing Blockbuster vs. Netflix side-by-side at this site. One advantage I found was that you can mail the movies back in or you can return the movie to your closest local store, if you happen to be in that direction. An online blockbuster member can also rent movies from the local stores for free. However, if you do this, once again you are subject to late fees.
Another perk I found that Blockbuster has tried to implement to combat Netflix and other online movie rentals, is that you get coupons each month for being a member. BlockBuster offers you two free in-store movie or game rentals every month. You're provided two printable coupons every month. You also receive other coupons, such as one for buying two previously viewed DVDs for just $15. -Perks
BlockBuster has a lot of competition and could one day go bankrupt if people become completely dependent on technology. But, I don't see that happening, at least not anytime in the near future. Families like to go to the movie store and send their kids in to pick a movie to watch. Sometimes you aren't planning on needing movies right then, or you get a sudden urge to watch a certain movie. If they don't have it available on OnDemand or Starz, what do you do? You drive to the movie rental store and find it, instead of ordering it online and waiting 5-7 business days. Overall, BlockBuster has tried to update to the current market situation and remain competitive in the business.

Virgin has a larger risk, in my opinion. Music is easily accessible online. Also, the fact that stereos and CD players have decreased in demand does not help either. Buying movies on Virginmega.com does not make sense either because they are just as expensive as they are in stores, and then you have to pay shipping and handling as well. -VirginMega I would buy the movie on Amazon.com because then at least you would get a deal. All of my opinions were proven correct when I found that the company will close its remaining stores in Denver, Orlando (Fla.), and Los Angeles over the next few months, and the assets of Virgin Entertainment Group North America (VEGNA) will be liquidated this summer. -Mega No More

I understand after reading statements from Virgin's chairman why they went under. They did not understand the current market situation. All of his opinions stated that kids weren't buying music because they were spending their money on cell phones, clothes, and electronics. He didn't say anything about online music access, such as iTunes. About 1500 music retailers have shut down because of iTunes and Napster, not including mass merchants or chain electronic stores. -Real Reason

Even in trying to liquidate and sell all remaining merchandise in a close-out sale, the company has not learned how to competitively price their merchandise to sell against online companies. One article states, "In terms of bargains, well … I didn't see many, at least not yet. Getting 30 percent off a $14.99 CD that's available for $9.99 on iTunes isn't much of a deal, and same goes for the overpriced $29.95 Blu-ray movies." -Closing Down

It is sad that people don't collect CDs or use CD players or stereos as much these days. But, iPods and MP3 players are taking over. There are even adapters to hook your iPod to your car stereo so you only need your iPod and may possibly use the radio. You can easily purchase music to be put straight onto your iPod with no need for CDs. And it is much cheaper to do so. While it may be sad to see Virgin Megastores go out of business, they just weren't keeping up with the times and did not adapt to the current competitive market situation.