Will Blockbuster Drop Out Of The Online Rental Game?

from the it's-all-about-the-money dept

One of the interesting side-notes to Carl Icahn getting three seats on Blockbuster's board of directors are the rumors that part of his plan to get the company to cut expenses is to shut down its online rental business, which might make Netflix cheer. It seems like an odd move. There's clearly some momentum in the direction of online rentals, though, perhaps it's a temporary blip before moving to downloadable movies-on-demand. Either way, it seems short-sighted not to invest in future opportunities. As for Netflix, the company has been able to do just fine while competing with Blockbuster. In fact, Blockbuster pulling out of the market may do more harm to Netflix by leading investors to believe the market isn't as big as some expected, and also by pulling Blockbuster's marketing power out of convincing people that renting online is the way to go. While the market is growing, Netflix can clearly gain some business from Blockbuster's attempt at consumer education. If they pull out, then Netflix is on its own again (Wal-Mart doesn't seem to be doing much) convincing people to rent their movies this way. Of course, a best case scenario might be that Blockbuster pulls out, and Amazon then decides to partner with Netflix, injecting its own marketing money into the space in a way that benefits Netflix.

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