Blockbuster Has Overstayed Its Welcome

from the going...-going... dept

Jeremiah writes “On the heels of our recent Google Video discussion, I couldn’t resist pointing out this (candid) article on Slate, that basically sounds the death knell for Blockbuster. A choice quote: “Netflix signed up over 3 million subscribers by 2005 by offering DVDs that could be kept as long as renters liked for a monthly fee. To compete, Blockbuster had to do away with its single biggest profit-earner: charging late fees to customers who kept videos past the due date. It also had to invest millions of dollars in a copycat online plan.” What strikes me as curious is this same author sounds a similar (but not as brute) call with respect to digital downloads: “The studios stand to gain even more from a huge audience willing to pay to download movies from their libraries. Unlike DVDs, which require manufacturing, warehousing, distribution, and disposing of returns, it costs almost nothing to download a movie or cartoon. Indeed, all the costs of transmission would be born by the cable operator (or a site like the Apple Music Store), whose cut would be less, under present arrangements, than retailers get on DVDs. So, if a movie were a huge hit, such as Shrek, and millions of orders flooded in, the marginal cost of filling them would be zero. The consumer, once he bought the download, could watch it where and when he chose to just as he once watched a DVD.” Key phrase: “….just as he once watched a DVD.” One wonders: Netflix, we hardly knew ya?” Actually, reading the details of the Blockbuster article, what’s most interesting isn’t the Netflix angle. He’s basically saying that Netflix was just the final nail in the coffin — but there were many, many other factors damning the existence of Blockbuster, including the company’s rush to open up so many stores (now a dead weight) and management’s strategic failure to accept the same deal it had on VHS tapes when DVDs came out. That decision basically opened the door for Wal-Mart, Best Buy and the other big retailers to wipe out Blockbuster’s entire reason for being with the single horrifying phrase: “loss leader.”

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Comments on “Blockbuster Has Overstayed Its Welcome”

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?!? says:

What about NetFlix

Do you think that NetFlix’s days are numbered too? Without question, the dvd mailing side is. But if things play out the way the article seems to indicate, NetFlix will be a gonner in a few years.

I don’t like the idea that I wolud have to visit every movie studio’s site to download the movies that I want to see, I like having a consolidated place to go for all that.

Do you think that the movie studios are really going to cut out the middle men?

Would you yourself want to visit each studio to rent or buy the movie of your choice?

Smoking Fetish Chick (user link) says:

Re: What about NetFlix

Oh I definitely would!

Many homes now have the bandwidth to do so. Tivo’s PVR’s and cable boxes make perfect movie players. I’ve always wondered why the movie companies don’t just team up with the cable providers and offer all their movies (through the cable box) using a pay per view model similar to netflix.

Anonymous Coward says:

Re: Re: What about NetFlix

Rogers Video in Canada is doing just this… they have over 2000 movies available using the PPV model. You “rent” the movie for 24 hours, and can watch it until it expires.

When it expires, it’s “returned” for you, and no longer appears in your available list.

When is Time-Warner or Comcast going to catch up to us backwards Cannucks???

Anonymous Coward says:

Re: Re: Re: What about NetFlix

I like this service,
…over 250 available channels, plus XM satellite radio stations as well! Add a TiVo-DVR unit into the mix for $4.95 more, and you have a product much better than any cable provider currently offers.

Now, if both cable and satellite companies would follow just as this article states, and provide CURRENT BOX-OFFICE releases… as an alternative to actually going to a movie theater, then there is a nice product! (Mike has also been suggesting this idea for quite some time now)

Road says:

Re: Re: Re:2 What about NetFlix

Maybe I’m wrong here but from the Producers stand point the idea of putting movies on TV through whatever means instead of the Movie theather may kill there profits. Not only do they charge a arm and a leg for you to go to the movies these days but the experience of a movie theather always adds to the hype and when it does indeed come out on PPV or DVD if you really enjoyed that movie more then likely you will purchase it. I think downloading your movies from home may extend the number of viewers but in the end hurt there profits. Most of us know what movies we’re willing to go watch at the theater or willing to wait for PPV DVD or cable as soon as we see a preivew.

In the end do I really want to have another reason not to leave my house!

Dan says:

Re: Re: Re: What about NetFlix

‘You “rent” the movie for 24 hours, and can watch it until it expires.’
Ummm…i had timewarner for the past 3 years in NY, and now NC, and about 2 years ago they came out with their on-demand service, which was just that. Maybe not quite 2000 titles, but lots of new releases and old stuff. Same thing, watch it as much as you want for 24 hours, then it disappears. Not sure about comcast, i know my parents have it, but am unaware of an on-demand like service.

Bill Melater says:

Just a simple question...

Last week I walked into the local Blockbuster video shop with the girlfriend and I enjoyed reminiscing about “the good ‘ol days”… the days back when you could BUY CDs and DVDs with content already on them …in this century, many tech-savvy people purchase these things blank

— and then put whatever they CHOOSE to put on them
— and watch/listen to the content just about where they want to watch/listen to it at…

The CD/MP3/DVD Player in the Car/SUV, the Front Room Player, the office computer, the Bedroom PS2/X-BOX or even “Mom’s” house, since she now has a multi-function audio/video “disc” player thanks to Hullmark/Holiday season

Dirkmaster (profile) says:

I don't think DVD rentals are going away anytime s

Too many people are forgetting that the reason that everyone thinks that downloading movies is cool is because they haven’t done it yet. Once they spend money, and a month later have nothing to show for it, this song will change. The only way that movie downloads will become mainstream is if the DRM is broken as completely as it is on DVD, so we can make permenent archival copies. As a general rule, people don’t like to spend money and have nothing to show for it. That is one of the reasons that theaters aren’t doing as well. Why should I spend $20 for tickets and popcorn, when for the same price, I can get the DVD and popcorn?

Jeremiah (user link) says:

I agree with ya


After reading your analysis here, I think I agree. Netflix was just another nail in the coffin (albeit a serious one).

I think Netflix’s days are numbered too, although I’m sure they’ll be around for another few years or so. I’m not sure what to make of the DVD medium, just yet. It seems DVD has only *just* penetrated the “ubiquity” level, meaning just about everyone has access to a player, and the vast majority of producers have access to manufacturing/distro. I hope the move to online distrubution (Google Video and its ilk) will further level access to consumers, and make it easier for smaller producers to have a voice.

Thanks to TD for keeping this discussion open!

Mike says:


Netflix is dead.
yeah, just like itunes killed of cd’s.

Perhaps some time in the way future you will be able to download a movie and watch it, for it to become popular enough to kill dvd’s you will have to have a consilidated place to do it from. At the very least to manage it. I like having one monthly fee and not having to worry about how much or what I watch.
I would not like to have to find the correct site to download my next anime. Then find the correct site to download the proper movie. I will pay for convenience. I would not like to have to watch the movie on my computer.

I also think there are enough like minded people.

Perhaps 20 years down the line there will be a standard way of getting a subscription for movies and shows on a set top box that’s connected to the internet. This not only would kill netflix but also cable tv. It will be great, but it’s not happening tomorrow.

Spawn says:

What about tangiblility?

There is something to be said about being able to go around the corner and pick up the most anonymous looking video.

Personally, I like going to Blockbuster down the street and seeing different faces at the store. I appreciate the a lot of the internet has given me. Access to limitless knowledge and porn at the same time. It’s a beautiful thing. But sometimes you need to leave your 5×5 room and interact with living, breathing entities.

Netflix, BB, and porn should all be able to coexist in equilibrium.

Jeff from NJ says:

Blockbuster R.I.P.

I agree with Mike’s comments about Blockbuster’s days being numbered, but I do think there’s another side to this story: For a growing number of people, going to a Blockbuster store is a really, really BAD retail experience. Ever try to find a new release movie that’s any good, at your local Blockbuster, on a Friday night before a date? FUGGEDABOUTIT. It’s an old lesson: Treat your customers like crap, and they will seek other alternatives. All Netflix has to do (eventually) is switch to movie downloads — no big deal, and I’ll bet they already have an exact calculation of the necessary residential broadband penetration to do it profitably.

Kent Horvath says:

Re: Blockbuster R.I.P.

For a growing number of people, going to a Blockbuster store is a really, really BAD retail experience. … All Netflix has to do (eventually) is switch to movie downloads…

Actually, if and when Blockbuster goes under, I would love to see Netflix offer a brick and mortar store to facilitate the returns of mail-in movies and complement their other offerings. Blockbuster gives its mail-in subscribers 2 free movies from its stores, Netflix could do the same, providing a quick-fix for the most popular rentals and saving the mail-ins for more obscure things like television series, documentaries, and BBC programs.

michael Vilain says:

Re: Blockbuster R.I.P.

No love lost there. In my area, Lackluster is known for hiring “bottom of the barrel” help (they must have flunked out of MacDonald’s U). My mom refuses to walk a couple blocks to rent from them because unless she stands there and watches the counter person check in her video, it will invariably be marked “lost” and show up on her credit card. She complained after this happened a 2nd time and the store manager sugguested she not use Blockbuster anymore. So, she drives 30 minutes to Hollywood Video in another area.

I wrote all this and sent it to Blockbuster’s Corporate HQ when they were indicted in Texas. I included our shredded Blockbuster cards. Never heard a peep from them. And that manager still works at the local store.

It all goes to the “treat your customers like crap” credo. I think my mom will dance and sing when Blockbuster finally closes. Maybe a Hollywood Video will open in it’s place…

haggie says:

No Subject Given

The difference between Netflix and Blockbuster is that Netflix KNOWS that DVDs will be obsolete in a few years. Blockbuster is still trying to figure out how to compete with Netflix. Talk about closing the barn door after the horse is gone…

What I want is an intelligent queue of first-run movies sitting on my PVR hard-drive that I can watch on demand. On a hungover Sunday, the movie industry could make a shitload of money off me. I would have gladly paid to watch 3-4 different first run movies last weekend (hangover courtesy of Jack Daniels), instead, I cleaned out my PVR backlog.

Anonymous Coward says:

No Subject Given

Seeing as there is no realistic replacement for the DVD, those of you sounding its death knell are a BIT premature.

A handful of dorks might enjoy spending a few hours using most of their bandwidth so they can watch a movie on a set top box ? but mom and dad who have given up trying to figure out how to use ?on demand? much less set the clock on the DVD player will never do it.

And then there is the DRM fight. How are the studios going to ?protect? this new format and make sure that no dork makes a copy of the downloaded video? We know that they are not going to be easily appeased.

And how exactly are you going to convince mom and dad to buy this new box, and pay for the new service when they already HAVE a DVD player that does the SAME thing with fewer hassles, and at lower cost?

And what about the folks who don?t live within walking distance of access to broadband? LOTS of folks still suffer with dial-up, and they are not all rural hicks either. The femail man still delivers DVDs to these folks ? but the Telco?s don?t ? and aren?t likely to any time soon.

NO ? DVD?s place as the defacto content distribution media of choice is secure for another decade or so.

BlockBuster Employee (user link) says:

Blockbuster dead? Don't think so.

Sure, NetFlix has made it big in the past – but BlockBuster offers things NetFlix cannot. For instance, the in-store rentals. You’re paying 17.99 with NetFlix for 3 movies and essentially you’re paying the SAME price for 6 movies at blockbuster. Also, what NetFlix doesn’t tell you – is after renting a certain amount of movies, they make you wait longer and longer to receive them. Why penalize your customers? What kind of customer service is that?

Many people have gone with Total Access for that very reason – rent as often as you like, and still get the movies without penalty. NetFlix is nothing more than a pebble in Blockbuster’s shoe.

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