AfterDawn: News

Blockbuster saves money by eliminating the COO

In an attempt to save money, Blockbuster's Chief Operating Officer position has been eliminated, and senior executive Vice President Nick Shepherd let go, although he will remain as a consultant through year's end.

James Keyes, the company's chairman and CEO since July, was brought in because board members felt former head John Antioco's plans to compete with internet based rental rival Netflix. As Shepherd leaves, two senior positions will be filled by Keith Morrow and David Podeschi, both of whom worked with Keyes at his former employer, 7-Eleven.



"Nick's position of chief operating officer is being eliminated. There's no other senior level role in the business," said Karen Raskopf, senior VP of corporate communications. "Nick has opted to leave Blockbuster to achieve his stated ambition to pursue broader executive responsibilities. He'd like to lead a company as CEO."

Jeff Embersits, an analyst at Shareholder Value Mangement said that Blockbuster hiring both a CIO (Morrow), and someone to be in charge of merchandising, distribution, and logistics is possibly an attempt to better position themselves to compete with Netflix.

Although Blockbuster's online rental plans have cause some problems for Netflix, high costs have the brick and mortar rental leader losing money in the process. Prior to the announcement of Shepherd's departure, Blockbuster recently set a limit on the number of times per month subscribers can return movies to brick and mortar stores and have their next movie sent sooner.

Source: Video Business

Written by: Rich Fiscus @ 12 Sep 2007 16:42

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• 20 comments

• Auslander

  this reminds me a bit of the titanic, only much, much slower.

  12.9.2007 17:20 #1

• pcrazy99

  I've been with Netflix for years now. I've always been satisfied with their service. I was never happy renting movies at a Blockbuster store due to a number of reasons and I felt that would translate to their online service.

  12.9.2007 17:34 #2

• Mr_Pink

  I was a member of Netflix but they blacklist certain customers. Blockbuster has not done this. Plus, with the trade-ins, I get double the movies I would normally get per month. I don't mind going down to the store since it's only 5 minutes away. 20 movies through the mail in one month? That's 40 total.

  12.9.2007 19:02 #3

• kenneth1

  I agree with Mr Pink, I was one who was throttled by Netflix, paying for a service they didnt want to honor, never have had that problemm with Blockbuster, with Blockbuster I am getting what I pay for.

  12.9.2007 19:13 #4

• pcrazy99

  Never had a problem with throttling. I'm on the 5 movie at a time plan. I probably get about 25 movies a month. Now Gamefly throttled the hell out of me.

  12.9.2007 20:32 #5

• duckNrun

  I tried both for a few weeks. In my short time I found netflix had quicker turn around times. I would send back a title on Monday and by Thursday I had the next selections. With Blockbuster I would send something back and it would take 4 days before they shipped the next set out to me.
  
  Also Netflix always sent me my top choice. With blockbuster my top pick would show 'available' the whole time I had other titles, it would show available even on the day they received my movies back all the way until it was time to ship it and then suddenly it was a 'short wait'. In the time I was with blockbuster I never received my number one item in the queue and they weren't new movies either. For example at one time my number one pick was the first disc of season one of Charmed- which had been off the air for awhile and season one was like 6 years old or something. I find it funny that, say, on thursday morning my #1 was available. Thursday early afternoon it was available. Late afternoon I would be notified that my selections shipped but at the last moment my #1 was all rented out.
  
  To me it seemed like they wanted to drag out getting me the choices I really wanted so as to maintain my subscription as I waited and waited and waited. But I never had this problem with lower priority choices.
  
  Funny thing is sometimes I would move the number one down the list and all of a sudden I had no problem getting it.... coincidence? You decide.
  
  When I finally go back to online rentals it will be netflix for me.

  12.9.2007 21:20 #6

• Mr_Pink

  Originally posted by duckNrun: I tried both for a few weeks. In my short time I found netflix had quicker turn around times. I would send back a title on Monday and by Thursday I had the next selections. With Blockbuster I would send something back and it would take 4 days before they shipped the next set out to me.
  
  Also Netflix always sent me my top choice. With blockbuster my top pick would show 'available' the whole time I had other titles, it would show available even on the day they received my movies back all the way until it was time to ship it and then suddenly it was a 'short wait'. In the time I was with blockbuster I never received my number one item in the queue and they weren't new movies either. For example at one time my number one pick was the first disc of season one of Charmed- which had been off the air for awhile and season one was like 6 years old or something. I find it funny that, say, on thursday morning my #1 was available. Thursday early afternoon it was available. Late afternoon I would be notified that my selections shipped but at the last moment my #1 was all rented out.
  
  To me it seemed like they wanted to drag out getting me the choices I really wanted so as to maintain my subscription as I waited and waited and waited. But I never had this problem with lower priority choices.
  
  Funny thing is sometimes I would move the number one down the list and all of a sudden I had no problem getting it.... coincidence? You decide.
  
  When I finally go back to online rentals it will be netflix for me.Well, Blockbuster states that if 'x' is "available" but it would take longer than their advertised turn around, then they'll send the title below 'x' because it'll get to your place quicker.
  
  But everyone always forgets that how quick these turn arounds are depends on where you are. I live in NYC so obviously there are more than 2 or 3 shipping centers. So when I used to mail my blockbuster movies, on the second day, it would clear my queue. For example, if I mailed it Monday morning, the movie would clear by Wednesday at the latest.
  
  BUT, because of total access, I don't even have to wait anymore. I agree that driving to the store would be a diservice to some (especially if you live in the middle of nowhere) but if you're close to the store (like I am), there's nothing better than this--even with the price hike.
  
  Netflix was GREAT for me but after a couple of months, it started to slowly decrease in volume. It got to the point where I was only getting one shipment a week. On top of that, it took about a month for me to receive new releases (wheras I get all the new releases at the stores the day they're released at blockbuster).

  13.9.2007 08:08 #7

• rick930

  It should also be noted that Blockbuster has been opening additional distribution centers across the country. I live in Tulsa, OK and oddly enough they opened up a distribution center here in the past month. I say "oddly enough", because this isn't a city that most people in the country would think of as a central hub for something like that. However since then I literally get next-day turnaround on shipments. My wife and I drop our mailers off at the local store, which is only a few minutes away, and within a few hours we are receiving notices that the next movies are on their way.
  
  Now the thing that I hate is that we've been a part of Blockbuster Online since it began, and with their new subscription options they aren't thinking of their customers, instead their thinking of the bottom line. Sure as a company they are going to worry about the money, but customer loyalty and service is how they get that money as well. Forcing long-term customers to opt for a more expensive subscription in order to retain the same number of unlimited shipments at a time, while cutting back on all of the things that made it worthwhile at the same time, just isn't practical business sense. Clearly the guys in the board room should listen to their customers as much as they listen to the greedy stockholders. After all, the stockholders aren't the ones making them all that money.

  13.9.2007 09:36 #8

• rick930

  It should also be noted that Blockbuster has been opening additional distribution centers across the country. I live in Tulsa, OK and oddly enough they opened up a distribution center here in the past month. I say "oddly enough", because this isn't a city that most people in the country would think of as a central hub for something like that. However since then I literally get next-day turnaround on shipments. My wife and I drop our mailers off at the local store, which is only a few minutes away, and within a few hours we are receiving notices that the next movies are on their way.
  
  Now the thing that I hate is that we've been a part of Blockbuster Online since it began, and with their new subscription options they aren't thinking of their customers, instead their thinking of the bottom line. Sure as a company they are going to worry about the money, but customer loyalty and service is how they get that money as well. Forcing long-term customers to opt for a more expensive subscription in order to retain the same number of unlimited shipments at a time, while cutting back on all of the things that made it worthwhile at the same time, just isn't practical business sense. Clearly the guys in the board room should listen to their customers as much as they listen to the greedy stockholders. After all, the stockholders aren't the ones making them all that money.

  13.9.2007 09:36 #9

• rick930

  It should also be noted that Blockbuster has been opening additional distribution centers across the country. I live in Tulsa, OK and oddly enough they opened up a distribution center here in the past month. I say "oddly enough", because this isn't a city that most people in the country would think of as a central hub for something like that. However since then I literally get next-day turnaround on shipments. My wife and I drop our mailers off at the local store, which is only a few minutes away, and within a few hours we are receiving notices that the next movies are on their way.
  
  Now the thing that I hate is that we've been a part of Blockbuster Online since it began, and with their new subscription options they aren't thinking of their customers, instead their thinking of the bottom line. Sure as a company they are going to worry about the money, but customer loyalty and service is how they get that money as well. Forcing long-term customers to opt for a more expensive subscription in order to retain the same number of unlimited shipments at a time, while cutting back on all of the things that made it worthwhile at the same time, just isn't practical business sense. Clearly the guys in the board room should listen to their customers as much as they listen to the greedy stockholders. After all, the stockholders aren't the ones making them all that money.

  13.9.2007 09:36 #10

• Jlhfit

  Fat pockets!! Every corporation in the world could take a note and eliminate positions that are not needed. Take that one Executive and his fat pay check, lower the product or service prices or focus the money into the actual product. Thats so sad.. How about elimanting other positions.. Reminds me how my brother and I was treated at a company I once worked for..
  I once worked for this "company" that had most of their family in management and executive seats. Well, the owners brother gets fired form his job, so they Lay off my brother and I and open a position called "Shipping Relations Manager" and give it to the fired brother. LOL.. I laugh now cause it forced me to work for myself, in which I am way better off now. Anyway my point is.. They charge outrageous prices for their service, crappy service, but pay out 100,00+ salaries to people that dont deserve it. I mean comeone "Shipping Relations Manager"..LMAO...what kind of title is that.. Crazy..
  
  By the way I am hiring for the position of "Do nothing but sit on you ass manager" Seriously how many managers,supervisors,CEO's ,etc do companies need?? Ever heard the old saying "too many chiefs and not enough Indians"

  13.9.2007 12:34 #11

• Mez

  pcrazy99, you must not rent them at a rate to be throttled. For the first 3 months they give you what you paid for. They send on out a few days after they get one in. If you return them too quickly you get slammed after that. I will never forget when I sent two in the same envelope. The first was "received" correctly. The second was received until 10 days later. I averaged less than 2 a week with NFs. It was not that mail I live in the same town and one of the biggest hubs for both companies. Their post office is only 3 miles from my house. That is what got me into trouble. I could watch them and post it that night. I bet they received some of their disks before they were supposed to be shipped.
  
  Without the in store trades BB is inferior to NF. BB does not play near the games that NFs does. You can also talk to a person with BB. I never figured out how to do that with NF even after 4 years.

  13.9.2007 13:36 #12

• FredBun

  Your right, trying to actually talk to a person with NF is truly almost impossible, even though I am angry about BB shutting down some of those great services which were a real plus for me but still able to access a person on the phone at BB is a plus.
  
  But I hope to hell BB doesnt start sliding down on any more service options, 5 returns to store per month instead of unlimited and loss of the coupon per month, they better be carefull, losing those free options have my decision making hanging on a string if we lose just one more I'm gone.

  14.9.2007 05:16 #13

• agwild99

  I have had BB online for about 2 years now and have nothing to complain about. I get three at a time and return them once a week for in the store rentals. This equates to about one movie a night. The rates to rent a DVD are almost $5 a pop. The worth to me is about $150/month, all for about $22 a month. Seems like a great deal to me. I haven't heard about the limit on the in-store returns. Must not be renting too much.
  
  Every time I am in BB there is always a line of people waiting to check out. I don't see how they could be losing money. Eliminating one executive's position won't really make a huge difference in the long run for them. Maybe $250,000 a year. They are a huge company that is probably dealing in the 10s to 100s of millions every year. If $250,000 makes a huge difference to wheather the company makes it or breaks it then they need to give up and go home. If they are paying their executives more than that a year than they are crazy. I think there is more of a political issue behind this move than they are letting on.
  
  But really, what is the difference to the average American? They go under we just switch to NF, or some other company that imerges from underground.

  14.9.2007 08:57 #14

• plutonash

  Hopefully they file that chapter 11 throttling bluray loving bastards.

  14.9.2007 10:50 #15

• borhan9

  This is funny getting a guy that worked in 7 eleven. What comes with the movie now. You get the DVD popcorn and a slurpee. :P

  14.9.2007 17:38 #16

• computarm

  Blockbuster online was only worth it to me when I could return every movie recieved in the mail and exchange it for an in-store rental. All of a sudden they limited this to 5 and they took the free monthly rental that could be used for a game rental. I cancelled because they took too much all at once from me and I got Po'd.
  Blockbuster baits you in with good deals and then they rapidly change the deal on you. I always hated blockbuster because they forced you to rent games for 5 days at a high cost, their late fee fiasco and the fact that they seemed to always have the highest prices on movie rentals.
  I now just get movies from a vending machine for $1.00/day. Blockbuster wants $4.50. I feel for them when they can be replaced by a vending machine. They have a rough road ahead to stay in bisiness imho.

  14.9.2007 18:51 #17

• pcrazy99

  Originally posted by Mez: pcrazy99, you must not rent them at a rate to be throttled. For the first 3 months they give you what you paid for. They send on out a few days after they get one in. If you return them too quickly you get slammed after that. I will never forget when I sent two in the same envelope. The first was "received" correctly. The second was received until 10 days later. I averaged less than 2 a week with NFs. It was not that mail I live in the same town and one of the biggest hubs for both companies. Their post office is only 3 miles from my house. That is what got me into trouble. I could watch them and post it that night. I bet they received some of their disks before they were supposed to be shipped.
  
  Without the in store trades BB is inferior to NF. BB does not play near the games that NFs does. You can also talk to a person with BB. I never figured out how to do that with NF even after 4 years.I have a distribution center nearby and I have never had a 10 day turnaround. I returned 5 movies today and I'll have 5 new movies by tuesday. If I have a new release at the top of my list, I'll have that by tuesday.

  14.9.2007 21:29 #18

• kenneth1

  If anybody wants a Netflix phone number here it is
  
  1-888-NETFLIX or 1-800-585-8131. Mon-Fri 9am-10pm Eastern Time
  Sat-Sun 9am-5:30pm Eastern Time.
  
  This is what I used when I got throttled and got pissed, I was so mad cancelled the same day it happened, customer service rep talked to me like I was stupid and did not know what I was talking about, well BB is down the road from me so guess who has my account now, I was a big time Netflix guy till they pulled that shit.

  15.9.2007 14:30 #19

• Mez

  pcrazy99,may things have changed but that occurance happened with in the year. If you are happy with them I will not 'rain on your parade'. That was not even a 10 day turn around. That was a 10 day difference in receive dates between 2 disks in one envelope. It was a 2 week turn around. That is what we call 'throttling'. Whe the computer marks youto be throttled you will figure it out quickly. The only way to fix it is to quite and re-apply using a different email address.
  
  My problem may have been that I would drop the disks at the post office of the distribution center. The turn around time for them was instant. I thought I was being smart. During the grace period I would get more than the 3 per week (even though it was supposed to be unlimited) because of the quick turn around. Sometimes they would get the disk the day it was supposted to be sent to me. For instance the Q manager stated the movie would be shipped on Wed. Sometimes I would get the movie on Tues. They would get the movie back Wed morning. If my envelope was opened and processed Wed the databas ewould have it shipped and received on the same day. That is a divide by zero for a computer. After the grace period I went down to 2 movies a week because of the hold time. After 5-6 years of renting movies I have seen most of what I really wanted to see. I could care less about getting many of my selections out of order. I prefer the 3 per week plus and extra 6 a month. That is 6 more than NF.
  
  BB will only ship you your allowance each week.
  I like the Red Box idea. Their selection is fairly limited. BB has started giving me more of a grace period for late fees. The fee has been waved even though I returned a 2 day more than a week late.
  
  BB did not lose money due to lack of sales. They bought a larger amount of DVDs to support their growing web business. They blaimed the loss on their generiosity so they could drop the service back a few notches. They are almost as slippery as NF.

  18.9.2007 03:45 #20