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IS blockbuster busted?

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VHS:blockbuster vs. DVD:Netflix

This is the GRE (Graduate Record Exam) analogy I would use for movie rental companies Blockbuster (NYSE:BBI) and Netflix (Nasdaq:NFLX). The popularity of VHS tape made the success of Blockbuster, as I read from Wiki, the first Blockbuster movie rental store was established in Dallas in 1985 (24 years ago). By similar token, the popularity and technology bring huge success to the “all you can eat” DVD by mail service provider Netflix.

Blockbuster logo

Blockbuster did not stand still. They got rid of the infamous “late fees”, replaced all the good old VHS tapes with much slicker DVDs, even tried the Total Access (combining DVD by mail and at store), but it appears they are still losing a lot customers to Netflix. More recently, the Redbox and Movie Box, those help-yourself (a dollar per rental) kiosk show up in McDonald, Walgreens, grocery stores, and people like it because it’s both cheap and convenient. But they also add salt to the injury of Blockbuster.