Despite the fact that technology is usually seen as Blockbuster Inc.'s enemy, Blockbuster CEO James Keyes still hopes that with new changes to the company customers will end up burning movies on CDs or other devices in Blockbuster's kiosks. He adds that store rentals will be an important part of the business for at least five more years even if it won't be the world's biggest movie-rental company. For him technology should be used to transform the company according to the changes that take place nowadays, because they already have the advantage to be the best-known brands in the world. Blockbuster is synonym to renting movies because of the 8000 stores owned. However, business has not been that great lately, making the company to lose more than $4 billion from 2002 through 2005. Keys, CEO from July, gave an interview to AP revealing the steps that will be taken In order to increase the company's profit (stores will get kiosks that eventually could be used to download movies, will begin transmitting movies to customers' PCs, will test new sales of small electronic devices, soundtrack CDs and books to reduce its dependence on the stagnant movie-rental business). If his plans impressed the readers, it did not impress the investors at the meeting held in New York last week. Keys the one that has on his list of problems to be fixed financial losses, junk-status debt, and a setback in its mail-delivery rental business, did not handled correctly the matter of explaining. The company's fall started in 2004 and afterwards each year the sales have slipped and stores rentals eroded. Netflix Inc. is the main rival and it reached 7 millions subscribers due to the rental orders on the Internet for mail delivery. It's hard to be toped out, because Blockbuster built its own mail-delivery service with heavy investment that led to a fight between the former CEO John Antioco and the company's largest shareholder, Carl Icahn. Now chief financial officer, chief operating officer, general counsel and the manager of the online business have also left the company and there is a staff problem too. So the main problem identified by keys was the desire to catch up Netflix that eventually got them $29 million loss as a consequence of the service called Total Access (all-you-can-watch feature). Therefore his first action as CEO was to limit the free in-store exchanges unless customers paid an extra $7 per month, but that led to the reducing of subscribers to 3.1 million. Michael Pachter, an analyst for Wedbush Morgan Securities and bullish on Blockbuster, states that the solution might be that Keyes and Chief Financial Officer Thomas M. Casey focus more on Blockbuster's short-term issues and do a better job explaining their strategy to Wall Street. Stay connected and see what's happening next.
Written by Claudia Sonea Edited by Zuzana Tylkova
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