Blockbuster: 1 Step Closer to Death


Something is dying right in front of me. Watching it happen is a little bit creepy -- and kind of exciting.

There used to be four Blockbuster stores within a comfortable 10-minute drive from my house. Going down the back alleys, you could even stumble across a couple (literally -- I mean two) mom-and-pop video stores as well. That was before Netflix killed 'em all.

Now, I'd have to cheat with online maps to find the nearest video store of any kind. Now, I have exactly one Blockbuster store closer than 30 minutes by car. Soon, even that one might be gone.

Blockbuster's parent company, DISH Network , has decided to close another 300 stores in 2013. Five hundred stores were shuttered last year; Blockbuster will be left with a scant 500 locations nationwide by next New Year's.

And before you bring up the Redbox-like Blockbuster Express kiosks, let me remind you that Coinstar has acquired the rights to that service, and will replace them all with proper Redbox machines. There's approximately zero room for another DVD-centric service in between Netflix and Redbox nowadays.

Even these two sector dominators are moving on. Netflix has been widely criticized for its desire to go all digital, all the time, as soon as practically possible. Redbox will soon have the DVD and Blu-ray space all to itself -- while exploring the up-and-coming digital distribution world in a partnership with Verizon.

The future of entertainment is 100% digital. Verizon and DISH must find a way to stay relevant in an era of more personalized, ultra-convenient, and low-cost content delivery systems. Netflix kicked off the party and will stay in the lead until someone else figures out how to do it better. That hasn't happened yet, which is why Netflix will soar as its market penetration expands.

Give it another four or five years, and DVD discs will become as quaintly obsolete as VHS tapes and eight-tracks. Blockbuster missed that boat by a mile, and won't live very long to regret it.

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Fool contributor Anders Bylund owns shares of Netflix, but he holds no other position in any company mentioned. Check out Anders' bio and holdings or follow him on Twitter and Google+.The Motley Fool owns shares of Netflix. Motley Fool newsletter services have recommended buying shares of Netflix and Coinstar. The Motley Fool has a disclosure policy.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

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