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The Cause of Blockbuster's Bankruptcy 

The long, slow demise of Blockbuster that culminated with an bankruptcy filing on Thursday provides another example of how the failure to effectively respond to changes in the distribution of content can doom an enterprise.

Blockbuster is barely a memory for most investors these days, but they would do well to pay attention to the continued tension between those who create content and those who distribute it.

One beneficiary of Blockbuster’s demise and one of the reasons for that demise has been the rise of Netflix , a company that has successfully bridged the gap between traditional delivery methods (in this case a DVD through the U.S. mail) and the emerging methods of online streaming.

Netflix figures in a great many conversations about the future of media these days. Its recent deal with Epix to secure a content partnership has had a profoundly positive effect on Netflix’s stock price, and has others in the industry asking why they can’t capture that value for themselves. The emergence of a streaming service from Amazon and the likelihood that as many as 15 percent of the TVs sold this holiday season will be equipped with Wi-Fi has also got media investors thinking about the threat posed by so called over-the-top technology—the cutting of the cable cord in favor of a broadband transmission that will enable viewers to use a Netflix or Amazon to deliver the content they desire.

All things to ponder as Blockbuster enters bankruptcy protection.


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