Blockbuster Video will always have a special place in my heart. When a store opened up a few blocks from my childhood home, it was a big deal. We were excited to walk over, browse the rows of VHS (and, for a short time, Beta) cassettes, and bring back a movie or two for three days / two nights.
Oh, how times have changed. Once valued at nearly $5 billion (in 1996 dollars), Blockbuster stock is currently trading at around 17 cents a share, which means that the company is currently valued at around $37 million.
So where is this $37 million in value? The the company has dropped more than 100-fold in value, but $37 million stills seems like a lot of money. Does Blockbuster have any significant revenue? Do they have exclusive agreements with movie studios that have value? Is the Blockbuster brand worth something? Can they sell all their old VHS tapes to Panama?
Determining the value of a company is an interesting and complicated problem. Facebook provides another good example of the complexities involved. Recent reports suggest Facebook has a value between $10 and $20 billion, even though Facebook’s revenue is on the order of $1 billion. How does one determine that all the non-revenue-related stuff (brand identity, user base, etc) is worth $9 billion?
One thing is for sure: Netflix, currently valued at around $5 billion, is definitely 133 times more valuable than Blockbuster. At least.