Blockbuster closes all US stores, what about Australia?

Blockbuster video is closing its doors across the United States, the once dominant rental video centre of American shopping centres has fallen victim to the rise of online video on demand services such as Netflix and Hulu. CEO of Dish, owner of Blockbuster U.S.A., Joseph Clayton said,  ‘This is not an easy decision, yet consumer demand is clearly moving to digital distribution of video entertainment…

By Eryk Bagshaw

Blockbuster video is closing its doors across the United States, the once dominant rental video centre of American shopping centres has fallen victim to the rise of online video on demand services such as Netflix and Hulu.

CEO of Dish, owner of Blockbuster U.S.A., Joseph Clayton said,  ‘This is not an easy decision, yet consumer demand is clearly moving to digital distribution of video entertainment…we continue to see value in the blockbuster brand and we expect to leverage that brand as we continue to expand our digital offerings.’

So how does this impact Blockbuster and all video rental services in Australia?

Managing Director of Franchise Entertainment, the owner of Blockbuster and Video Ezy Australia, Paul Uniacke said ‘we run our own show in Australia and we really have little or no contact with our US counterparts.’

‘We still believe that (video) stores will have a presence in Australia until 2020,’ said Uniacke.

It’s an optimistic outlook for business model that has been under threat from piracy, video on demand services and smaller unmanned kiosk operators.

Blockbuster Australia itself is making aggressive moves into the kiosk market with 4000 kiosks expected to be rolled out across the next 3 years.

This is where the future of video rental lies, at least for the next 4-5 years believes Uniacke, ‘the online space is a really small space’ with operators like Quickflix struggling to turn a profit since opening in 2003. ‘We had the option to move into the video on demand or the kiosk market, the kiosks are a low cost option,’ said Uniacke.

The kiosk system will run in parallel with the franchises, with franchisees able to take over unmanned kiosks around the country in order to maximise market share. ‘We are not rolling out the business at the expense of franchisees, we are supporting them,’ said Uniacke.

Nonetheless, Uniacke claims that the biggest challenge to the continued presence of video stores is high rents and wages which have driven most video stores out of metropolitan areas.

Uniacke hopes that the kiosk system will solve this problem and keep Blockbuster competitive in a rapidly changing video delivery market.