Blockbusters goes bust

Like many people I have great childhood memories when I’d borrow games and DVD’s from this legendary store every Friday night. In those days, there was no Love Film and Netflix, so there were no alternatives to having high quality media at cheap, affordable rates. When I heard the news that Blockbusters was closing it really hit home that the physical retail sector was dying and was rapidly being replaced by a new virtual market online.

For those who don’t know Blockbusters is an international provider of movie and video game services with 60.000 employees worldwide, many of them operating in the 1000 store strong American subsidy of the firm. They first opened their doors in the United Kingdom in 1989, after being successfully received by Americans since its launch in the USA four years earlier in 1985. Blockbusters were a very successful business before the emergence of internet competitors such as LoveFilm, now owed by the Internet giant Amazon.co.uk. Also due to the popularity of DVD piracy, the demand for DVD’s is very low, even though some of the most commercially successful firms of all time have occurred in the last decade (Slumdog Millionaire, Avatar, etc). Many people can now watch nearly any widely known film online almost instantly by typing the phrase “Watch (movie name) free online” for free and without leaving their home. Due to this and probably mismanagement too, Blockbusters UK was taken into administration on Wednesday 16^th of January 2013 by Deloitte, a member of the big four audit firms. The firm has shed around 100 stores in the last few years and is set to do so to 160 more of their stores. Its highly likely that 760 people will face redundancies and will be added to the UK’s staggeringly high unemployment pile and unfortunately it is also likely that another 4000 people could risk unemployment if the administrators fail to find a buyer.

Deloitte has said “Having reviewed the portfolio with management, the store closure plan is an inevitable consequence of having to restructure the company to a profitable core which is capable of being sold.”

Blockbusters aren’t the only retailer to be hit by the Internet powershouses, HMV and Jessop’s have also gone into administration. It could be argued that the demand for Camera’s has decreased as these are now incorporated at a high standard into mobile phones, however I'm pretty sure that more people than ever before listen to music, so  ITunes and Amazon MP3 must be the cause for HMV's downfall.

Recently its come to light that Apple, the ITunes Owner only paid 2% in Corporation tax outside the US, which is advantageous in a competitive sense as it means they can afford to reduce prices whilst retaining their profit margins whilst firms like Blockbusters who actually pay the required amount are penalised for doing so. I think tax avoidance is a major issue in the UK, maybe the coalition government wouldn’t have to make as much of their lethal “necessary cuts” if they stopped these multi-national firms stealing openly from Britain’s purse.