Blockbuster Plays Hard Ball with Hollywood

I don't think it's much of an advantage. DVDs are not perishable items. If someone really wants to watch a movie bad enough they could have seen it in the theater. If they can wait for it to come out on DVD, they can certainly wait another month and get it for a buck out of Red Box. Or better yet, free from the library or on YouTube.

David Livingston, Principal, DJL Research

My question upon reading this article is why the three studios in question reached this sort of agreement with Blockbuster in the first place. There must have been favorable financial terms, not just the promise of preferred shelf space. After all, better shelf space in a rapidly declining retail concept is of questionable value.

Did the movie studios consider the speed with which Blockbuster has closed locations all over the country? Did they consider that the "bricks & mortar" delivery concept is rapidly achieving obsolescence? It makes you wonder what this decision is going to look like five years from now.

Richard Seesel, Principal, Retailing In Focus LLC

Great move for Blockbuster, bad for the consumer and the studios.

One line in the article points out a real problem. We can not afford to promote the new 28 day window because of cash.

The real question is why are the studios betting on a horse that is already in last place and fading fast?

Mel Kleiman, President, Humetrics

The studios are trying mightily to find ways in protect their products from piracy and increase revenue streams. They are bound by a 70 year old consent decree prohibiting them from owning theaters and rely on companies like Blockbuster to reach consumers in the post-theatrical aftermarket. Consumers, on the other hand, want a movie to be delivered by the method of their choice, in the format of their choice, on the date of their choice. There's a basic conflict here.

This conflict has been building for years.

Blockbuster is the latest to try to find a way to exploit it. It may want to play hardball with the studios to get favorable terms and a Netflix-free window, but Blockbuster is still bogged down with retail leases and the need for a consumer to make extra effort to visit its stores.

Eventually the movie distribution paradigm will shift and consumers will be able to get any film they want, on any device, on the day of its initial release. Some will choose to watch it in theatres, others on home TVs and others on hand-held devices. The studios would like to see this, although most won't publicly say so. It's what consumers are waiting for. I think we'll start to see this become a reality in the not too distant future. And when we do, Blockbuster's hard-ball tactics will be a distant memory, as will the company itself.

Max Goldberg, Founding Partner, The Radical Clarity Group

It seems to me this is sort of like rearranging the deck chairs on the Titanic. This strategy and just about everything else Blockbuster has rolled out over the last 5 years all simply forestall the inevitable...people want movies delivered digitally.

I realize that there are some stalwarts out there for whom the trip to the video store is "part of the experience" but their numbers simply don't support any future for the format.

Doug Stephens, President, Retail Prophet

It does not seem to make sense. They should focus on providing shoppers what they want.

Sandy Miller, President, Miller Zell

If the studios are getting more money the deal is favorable for them for now. Since Blockbuster is not advertising the deal, many consumer do not know about it. In addition, a number of Blockbuster stores have closed so they are not as convenient for some consumers to use. If the studios see a difference in usage that affects their revenue stream the deal will not last long. Blockbuster is no longer the major source of movie viewing so the deal may not have much impact on consumer movie viewing.

Camille P. Schuster, Ph.D., President, Global Collaborations, Inc.

Blockbuster may have won a temporary victory, but it's not enough to save it. Good move for buying time, nothing more.

Ryan Mathews, Founder, ceo, Black Monk Consulting

Blockbuster needed to do something to keep themselves afloat and this may help for awhile. (Like the Titantic analogy :)) Hopefully, they are thinking of other very creative and out-of-the-box things to evolve to in order to generate significant revenue to justify their operating cost.

Susan Rider, President, Rider and Associates, LLC

Doesn't matter. The idea of going to a store, parking, shopping, getting in line, returning--for a movie--is a dead idea. Unless it's a buck (which doesn't support a store)! Like music and books have proven already, we'd rather shop on-line or get it for practically nothing. Just check the success of Netflix and Redbox. The cat is out of the bag and the old and sick mice are doomed.

An interesting question is; what's going to happen to all of them when we can simply download a movie, any movie? I think we know that answer to that one too; it's called iMovie. Meow.

Lee Peterson, EVP Creative Services, WD Partners

Too little too late. Blockbuster should spend its dwindling resources on finessing its online business model and extricating itself from bricks and mortar contracts. How much did it cost them to secure these exclusive deals? In any case, the one true advantage they have over Netflix and Redbox--delivering a superior customer service--is starting to disappear. The last time I visited my local Blockbuster was a depressing experience--dim lighting, stale aroma, poor signage and a sad array of snacks to choose from. My DVD was available but that seemed almost unimportant.

Victor Willis, Director, Campbeltown Consulting

As most panelists reported, this move may buy time for Blockbuster to reinvent itself going forward. It has been disappointing to go into a Blockbuster, see new movies listed as "coming soon"--and the staff were unsure when this might occur. It may help for now, in some locations.

Longer term, Blockbuster will have to create a better reason for its locations than a few weeks lead time, the ship has sailed, and time to look forward to new distribution/technology to engage today's consumer.

Anne Bieler, Sr. Associate, Packaging and Technology Integrated Solutions

Blockbuster...are they still in business??? I think the remarkable part of this story is the suggestion that BB might (still) have some kind of leverage; I would have thought they would still be out waiting in the reception area. Then again, this is a company dealing with an industry who both have in common that their delivery method is outdated (or almost so): I guess they're made for each other.

'notcom'

I think everybody involved in this deal is hopeful rather than realistic. The Blockbuster store-front business model is dying. The consumer has chosen other means for renting movies. A 28-day exclusivity window is not likely to turn the tide on consumer preference.

Still, for the studios, this might be a no-lose deal. If Blockbuster ultimately can't turn their business around, they'll go away and so will the deal. If the deal turns out to be inconsequential in the marketplace, the studios pick up a little bit of extra cash from Blockbuster, and the rest when the movie "really" breaks 28 days later. And if it should happen to work...

Ted Hurlbut, Principal, Hurlbut & Associates

Blockbuster is trying to negotiate within their old model which is already outdated and dying. Blockbuster needs to evolve or perish. The customer is asking for immediate access and more current movies now, with electronic downloadability. Blockbuster needs to deliver on this model or it will eventually perish.

Kai Clarke, President, Miraclebeam Products, Inc.