Despite going into receivership, Blockbuster Canada‘s brand power could make it an attractive acquisition target, even as it closes stores and Canadians increasingly turn to new technology to watch movies.
Industry experts say the chain of movie and video game rental stores is still valuable, making it a potential target for entertainment companies looking to offer a new type of product.
Blockbuster Canada is currently in receivership and will be sold to pay off $70 million in debts racked up by its former American parent, which was acquired out of bankruptcy in April by Dish Networks.
“Typically when the brand goes bad, they screwed up or something happened negatively or everybody left it for a negative reason. You can’t say that about Blockbuster,” said Ed Roach, a consultant at firm The Branding Experts.
He explained that there is generally public goodwill toward the Blockbuster brand, but it lost customers because it simply failed to evolve as technology improved.
Blockbuster Canada continues to grapple with the increasing number of Canadians who get their movies through on-demand technology or internet movie rental websites such as Netflix.
“(Blockbuster) has got a more powerful brand than Netflix,” Roach said, explaining that the name itself could be useful to a company trying to beef up its movie offerings.
Some Canadian Netflix users have complained that it offers a smaller selection of movies compared to traditional video stores like Blockbuster.
Colin Ciezynski, a market analyst at CMC Markets, said whoever ends up buying the leaner Blockbuster Canada should offer a wider variety of merchandise at stores for the chain to survive long term.
“Certainly there would have to be some sort of change to their business plan just to reflect the fact that the industry they’ve been in has been in decline for many years,” he said, comparing Blockbuster to music retailer HMV Canada, which now sells books, video games, clothing and headphones as it reduces its floor space devoted to the shrinking DVD and CD industry.
But who would want to buy Blockbuster Canada, which is struggling in an industry that is slowly making its entire business obsolete?
Unlike Dish, many big Canadian players are already well entrenched in multiple areas in the entertainment industry.
Bell Canada, for example, acquired The Source stores as a national retail channel after U.S. electronics retailer Circuit City was liquidated. Similarly Rogers, Telus and Quebecor’s Videotron have extensive retail locations in place.
When contacted by The Canadian Press, Canada’s telecom companies either declined to comment on Blockbuster Canada or did not return phonecalls.
