Blockbuster, a movie rental giant, closes over 800 stores after unsuccessful transformation from large stores into kiosks. And although it was a good strategy for the company to increase its profit, the product itself is not compatible with the market anymore. One of the reasons for that is that one must go to the store and rent the video manually, whereas other services exist, which offer the rent of a movie without leaving the house, such as Video-on-Demand, which is significantly more convenient. The other reason why Blockbuster failed was the free videos which can be downloaded from internet, thus creating a great threat to the costly Blockbuster rentals.
On the other hand, the expenditure of Blockbuster into kiosks would, theoretically, significantly increase the popularity of the service due to a significant number of people passing by one of the kiosks in such popular place as a shopping mall. In addition to that, the fixed cost – the rent of the space, where the sales occur, would be significantly less in a mall rather than having a separate location (kiosk is significantly smaller than a store) .
Therefore, the expenditure of Blockbuster into kiosks in 2009 can be compared to the increasing manufacturing of typing machines at the dawn of personal computers – both became useless not because of their improper management, but because of the increased competition from other products or services.
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