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This topic comprises 7 pages: 1 2 3 4 5 6 7
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Author
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Topic: Blockbuster's future in question
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Michael Barry
Jedi Master Film Handler
Posts: 584
From: Sydney, NSW, Australia
Registered: Nov 1999
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posted 08-29-2011 09:04 PM
It's interesting about Family Video. They are opening new stores and by industry reports are doing very well.
The bricks and mortal video business model isn't broken.
It's just that the large corporate chains, especially Blockbuster, made some fatal errors over the last few years.
For me, there are reasons that regular video stores still have a business model. The DVD format still offers the largest selection of movies by an embarrassingly wide margin. Sure, Netflix can mail those out to you but a well-stocked video store can beat those delivery times hands down. You can forget all about those 'very long waits' on certain titles with a video store.
Also, when it comes to sheer A/V quality, Blu Ray wins. Period.
You can only rent Blu Ray discs from Netflix or from a physical store, and once again, the store will handily beat those snail mail delivery times. Especially on weekends when the mail doesn't deliver.
So for range (DVD), quality (Blu Ray) and speed of delivery (minutes vs. waiting for the mail to show up) video stores win.
So the only way that video stores are obsolete is if they don't have a very deep back catalogue, don't have pretty much all Blu Ray discs released, are poorly located, or badly run/managed. Otherwise, how do they not deliver a superior experience on all fronts?
And what about Redbox or its clones around the world? Great idea. Shame about the selection.
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Justin Hamaker
Film God
Posts: 2253
From: Lakeport, CA USA
Registered: Jan 2004
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posted 08-29-2011 10:28 PM
Michael, the issue isn't really about whether the video store model is good. It's a good model for all the reasons you pointed out. However, consumer habits are going in a different direction.
As a consumer, I appreciate the quality of Blu-Ray, and it's what I'll pick when given a choice. But DVD quality is sufficient for most movie watching purposes - especially when watched on a Blu-Ray player or a player that up-converts.
Netflix DVD service may not offer the instant gratification of a video store, but for those who watch a lot of movies, there is no reason to ever go more than a day without a new movie. I canceled my DVD service, but when I used it I would drop a DVD in the main on Monday and have a new disc on Wednesday.
But Netflix isn't the only game in town. I can now do pay-per-view of new releases through Amazon and those are in HD. I don't know how far Amazon pay-per-view is behind DVD/Blu-Ray release dates, but their current list of new releases has movies that were out in late March and early April - even May in the case of Priest.
The real issue is the market for home entertainment has become so fragmented that it can not support numerous video stores/chains in any given area. And in order for video stores to remain competitive, they have to change their business model.
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Michael Barry
Jedi Master Film Handler
Posts: 584
From: Sydney, NSW, Australia
Registered: Nov 1999
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posted 08-30-2011 03:04 AM
I agree that the market is more fragmented and there is increasing competition from sources both legal and illegal. That is certainly a factor.
However, I think part of the problem was that the big chain stores overbuilt during the time they had a virtual monopoly on home video. These companies were able to withstand the extra overhead due to the overwhelming demand at the time, but those overheads are killing them now that there is some competition. Perhaps there was never a need for having 8 stores in one town, but now there certainly isn't.
The other issue is that their business model underestimated or ignored the market for anything that wasn't a very new movie. They got away with this for a long time simply because there weren't many other options. If they didn't have a copy of 'Klute' or 'Being There' then you were out of luck. They were primarily focussed on new movies, which worked for a long time since there were few alternatives, if any.
I think that when Netflix came along, many people had access - perhaps for the first time - to a deep back catalog of DVDs. This caused customers of the traditional walk-in store to migrate to Netflix to gain access to these titles that were previously unavailable. Although the Netflix DVD service is not ideal for new releases, people added these to their queue anyway since they were already signed up and the result was a migration away from Blockbuster and company.
I feel that if the large chain stores had a maintained a more competitive selection of movies when Netflix first entered the market, Netflix would not have been able to nudge in on the market quite as easily, as there would have been less incentive for a customer to migrate since all the customer's needs were essentially being met.
I think that even today, there is a market for Netflix, cable, VOD, Redbox and yes, brick and mortar stores to all co-exist. They all serve a purpose. However, a well-run video store, if well-stocked, should have no trouble holding their own since they have all the major advantages I outlined in my post above. The only negative is that it is hard to reclaim customers once you have let them slip away. Family Video is going to give it their best shot.
FWIW, I'm not an employee of Family Video.
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Aaron Garman
Phenomenal Film Handler
Posts: 1470
From: Toledo, OH USA
Registered: Mar 2003
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posted 08-30-2011 02:29 PM
quote: Tom Petrov
A brick and mortar has absolutley no chance in todays marketplace. With instant downloading, mail-ins and $1 Rebox, a video cannot compete against this.
I can't disagree more: see Family Video's success.
I used to work for Family Video and they have their business model down cold: own their property, own their libraries, push out tons of product for very low cost and make it easy for anyone to have an account. They also tend to build in areas that are within a neighborhood rather than some large commercial center. The idea is that folks can get to the store quickly, have a large selection, and don't have to pay a lot to do it. We also used to get around the fact that Blockbuster had "exclusive" titles by heading down to Wal-Mart on Tuesday morning, buying a set amount of the "exclusive" title and then renting it out that day. The folks in charge there are very shrewd and I have tons of respect for them. The fact that they've weathered the change in consumer habits so well is proof they know what they're doing.
There is still a want and desire from consumers for a brick and mortar video store because the mail doesn't run every day, red box isn't personal, and sometimes you just get that impulse to rent.
Oh, and who can forget kids movies renting for free!
Family Video is going to be the last video store standing, and I'm sure it will stand for quite some time.
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Tom Petrov
Five Guys Lover
Posts: 1121
From: El Paso, TX
Registered: Jan 2003
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posted 08-30-2011 02:37 PM
quote: Michael Barry
I'm not sure I understand your position. You mentioned downloading, but this isn't Blu Ray quality like you can get at a store. Then you said there's Redbox, but the selection is very small compared to even a modest video store. So the video store in your examples would seem to come out in front. Would you be able elaborate on your points a little, please?
Michael, my point is that when Blockbuster etc was doing well and at its peak, there was no sell-thru prices, no video machines, no mail-in, no online downloading, no only E-Bay buying and no Wal-Mart etc.
There was always a rental period before the sell thru price. Having RedBox charge $1 and Blockbuster charge $6 for the same DVD or movie, Blockbuster has no chance.
There is just so many alternative ways to buy, rent, download and get mailed a movie that driving to the video store to buy and return just makes no sense.
Aaron- Giving away movies for free, the same movies that Michael thinks people want to browse through at a video store is simply the writing on the wall that the video store is dead.
FAMILY VIDEO OFFERING FREE CATALOG MOVIE RENTALS!
Remember Blockbuster rent as many old movies as you like for $9....well now you can do it for FREE!
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Aaron Garman
Phenomenal Film Handler
Posts: 1470
From: Toledo, OH USA
Registered: Mar 2003
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posted 08-30-2011 04:18 PM
The stores locally here at least are not hurting. The point of free movies for kids is to drive families into the store. Kids get something free, and the adults pick up the new releases and other things. Trust me, the attach rate on those free movies was amazing.
Also, unlike BBI and Hollywood Video, we rented out porn and made a fortune on it. Try that on Netflix.
Heck, if you have trouble with a disc, you don't have to wait a couple days to get a new one: you walk right into the local store and get a new copy or get a credit. If the internet is down, you can also still watch a movie if you rent locally.
There are many people that don't want to deal with a computer or a kiosk to rent their movies, and that is where Family Video comes in. People like interacting with people sometimes, and even though streaming and online renting will continue to grow, there is still a place in the market for a local video store. It's not obsolete, but rather a nice option and alternative to online renting/streaming.
AJG
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Tom Petrov
Five Guys Lover
Posts: 1121
From: El Paso, TX
Registered: Jan 2003
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posted 09-01-2011 07:44 AM
R.I.P. Blockbuster
TORONTO — Blockbuster Canada's remaining stores are set to close soon and 2,300 more jobs at the national movie rental chain are about to disappear, victims of the digital movie revolution.
The receiver in charge of selling Blockbuster Canada wants a court order to shut down the movie rental company's 253 remaining retail locations, saying Wednesday it had been unable to find a buyer willing to invest in the business.
There were a total of 14 offers submitted, including eight that contemplated acquiring all of Blockbuster Canada's assets, but all of them included conditions or other problems that weren't acceptable to the receiver.
About 150 Blockbuster Canada stores were closed in June, as it grappled with a shift to digital downloads, a tepid economy and new ownership of the U.S. Blockbuster chain which left the Canadian chain in debt.
A receiver's report filed with the court Wednesday said Blockbuster Canada had about 4,000 employees across the country before the earlier closure resulting in 1,505 lost jobs. The company had about 2,300 employees as of Aug. 31.
"As a result of the significant changes in Blockbuster Canada Co.'s competitive landscape, the company's 'bricks and mortar' business model has experienced significant challenges over the last few years, largely due to the proliferation of various alternatives available to media consumers in Canada," the receiver said in a statement issued late Wednesday.
The receiver said Wednesday the closure process should begin in the next few days, and existing gift cards and rewards programs will no longer be accepted.
A court hearing to consider the full-out closure is scheduled for next Tuesday.
There were long lines at stores set to be shuttered when the first round of liquidation sales began in June, with customers stripping the shelves bare in only a few hours as they bought stacks of $4 DVDs.
Wednesday's statement from the receiver did not outline liquidation plans.
The receiver said it has tried to sell the company, but was unable to reach a deal with a buyer that was willing to make the necessary investments to keep the business going.
Blockbuster Canada was placed into receivership by an Ontario court in May in the face of US$70 million in claims from various movie distributors, including Hollywood studios that provide its DVDs, and other suppliers.
The Canadian operations had acted as a guarantor for Blockbuster's U.S. business, which went into bankruptcy protection in September and was later auctioned off for US$320 million to American satellite TV provider Dish Network Corp. (Nasdaq:DISH). Dish did not buy Blockbuster Canada, which was left to pay the bills.
Earlier this month, a New York court delayed a hearing that would have decided whether Blockbuster Canada could legally use the brand name as it went through receivership.
The new owner of Blockbuster USA had said it did not want the Canadian retailer to use the name, while Blockbuster Canada argued it had paid fees for that right. Blockbuster stores had operated in Canada for 21 years.
The receiver in charge of selling Blockbuster Canada had argued that stripping the chain of that right would "devastate" its business.
Blockbuster Canada had been struggling to stay relevant in a time of increasing digital movie downloads.
U.K.-based HMV, once a top music retailer, sold off its Canadian arm in June to Hilco, a company that agreed to invest up to $25 million to fund the evolution of the national music, video and game retailer as it adjusts to the new world of digital entertainment. HMV was drowning in debt and needed to sell off HMV Canada to pay its bills.
HMV Canada had recently been boosting its offerings to focus on a broader selection of music and film-related products, including T-shirts, headphones, video game controllers, mobile phones and other electronics, in an effort to curb declining revenues as disc sales weaken and more shoppers opt for downloads.
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