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This topic comprises 3 pages: 1 2 3
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Author
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Topic: Blockbuster Video-Rental Chain Will Shut All U.S. Stores
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Terry Lynn-Stevens
Phenomenal Film Handler
Posts: 1081
From: Toronto, Ontario, Canada
Registered: Dec 2012
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posted 11-06-2013 08:33 PM
Blockbuster Video-Rental Chain Will Shut All U.S. Stores
Blockbuster LLC, the video-rental company owned by Dish Network Corp. (DISH), will close its remaining 300 U.S. stores, ending an era for a chain that was once a ubiquitous part of American shopping centers.
Blockbuster will shut the outlets by early January and discontinue its DVD-by-mail service by mid-December, Englewood, Colorado-based Dish said today in a statement. Each Blockbuster store has eight to 10 employees, so the move is expected to cost about 2,800 jobs. Dish will keep the licensing rights to the Blockbuster brand and use it to sell other services.
“People were waiting for the death knell for that business for many years,” said Matthew Harrigan, an analyst at Wunderlich Securities Inc. “With everything happening on the digital distribution side, it has been long overdue.”
Dish, which acquired the chain out of bankruptcy in April 2011, had already divested Blockbuster’s international assets, including operations in the U.K. and Scandinavia. The company has been gradually shutting down the 1,700 stores it acquired.
“This is not an easy decision, yet consumer demand is clearly moving to digital distribution of video entertainment,” Dish Chief Executive Officer Joseph Clayton said in today’s statement. “We continue to see value in the Blockbuster brand, and we expect to leverage that brand as we continue to expand our digital offerings.”
Blockbuster was once so dominant in the home-video market that it was sued by independent video retailers, which claimed in 2001 that the company’s revenue-sharing agreements with movie studios hurt competition. The lawsuit was later dismissed.
Netflix Streaming
When the company was spun off by Viacom Inc. (VIAB) in 2004, it operated about 9,000 locations -- before streaming video services such as Netflix Inc. (NFLX) devastated the industry. Blockbuster filed for bankruptcy protection in September 2010.
Dish took over Blockbuster the following year, aiming to use the stores to sell mobile devices that could stream Blockbuster movies. The plans broke down when U.S. regulators didn’t immediately approve a waiver allowing Dish to use its satellite spectrum for terrestrial data and voice transmission.
The Blockbuster brand will continue at Dish through the Blockbuster @Home and Blockbuster on Demand options, which stream movies and videos to televisions, computers and other devices, Dish said.
Dish shares were little changed today in New York, closing at $48.84. The stock has risen 34 percent this year.
While the demise of the Blockbuster chain is symbolic for the industry, it won’t have a big impact on Dish’s prospects, Harrigan said.
“It’s certainly an end-of-an-era type thing, but in terms of that affecting Dish’s stock, it doesn’t have any particular importance,” he said.
http://www.bloomberg.com/news/2013-11-06/blockbuster-video-rental-chain-will-shut-remaining-u-s-stores.html
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Bobby Henderson
"Ask me about Trajan."
Posts: 10973
From: Lawton, OK, USA
Registered: Apr 2001
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posted 11-08-2013 09:39 AM
That article, like so many others, gives Netflix and other Internet-based movie streaming services all the credit for the rapid, downward trajectory of Blockbuster video stores and other traditional "brick and mortar" stores.
I guess these writers never heard of Redbox.
The rapid rise in popularity of Redbox in the late 2000's coincides directly with the downfall of many traditional video stores. Redbox DVD kiosks went from market testing at 140 McDonald's locations in 2004 to surpassing Blockbuster in number of locations by 2007. In Feb 2008 Redbox passed the 100 million rentals mark. It charted 1 billion rentals by Sept. 2010. In Feb. 2012 Redbox purchased Blockbuster's rival DVD Kiosk system (Blockbuster Express). That included over 10,000 kiosks & DVD inventory. Redbox pretty much has the entire movie/game disc kiosk market all to itself.
Out of disc based movie rentals, Redbox now controls more than 50% of the market. Last quarter customers rented more than 186 million movie discs from the company's 43,700 kiosks. Traditional video stores control less than 25% of the market. Redbox is even eroding the share of Netflix' disc by mail service.
The popularity of Internet streaming services is growing. But some of that popularity is stifled by widely variable quality and availability of broadband Internet service across the United States. Old fashioned dial-up style connections are pretty much dead and gone, but the "broadband" most Americans have can barely deliver an acceptable looking standard definition movie stream. Few Americans have Internet speeds that can stream HD content that is on par with the heavily compressed signals delivered by satellite providers. Very few Americans have fiber connections capable of delivering Blu-ray like bit rates in real time.
Another issue: broadband Internet service is a product geared for middle class and upper class customers. Redbox and its $1 rentals had wide appeal among low income customers. High gas prices also helped grow Redbox' popularity. The nearest Redbox kiosk was often much closer in driving distance than the traditional video store. Movie streaming is more popular among younger Americans while older Americans like the simplicity of inserting a movie disc and pressing the play button.
With all that being said, I think Redbox did a lot more to push Blockbuster into bankruptcy and its ultimate liquidation than Netflix and other Internet streaming services ever did.
A few movie studios figured out what Redbox was doing to the traditional video store business model and filed suit against the company in 2009. Those suits have largely been settled in the past couple years. Redbox was stuck with a 28 day window from the retail release of a movie disc before it can be offered for rent in Redbox kiosks. That window doesn't apply to all studio releases.
Redbox isn't sticking with the traditional disc based formula. They now have their own movie streaming service, Redbox Instant. I didn't know about this until I saw the app appear on my Playstation 3 with the latest PS3 software update.
quote: Jesse Skeen
Good riddance to bad rubbish! Maybe now studios won't be so afraid to release movies with an NC-17 rating.
They're still going to be scared to do so. Certain theater chains, such as Carmike, won't book any NC-17 rated movies. Some newspapers won't show ads for NC-17 rated movies, although the value of newspaper advertising for movies has greatly diminished in recent years.
I don't know if any of the various movie streaming service companies have any policies against offering NC-17 rated movies. Not that it should matter. Premium cable channels show content that drifts into NC-17 territory on a fairly regular basis. Hollywood movies are arguably pretty tame in comparison.
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Terry Lynn-Stevens
Phenomenal Film Handler
Posts: 1081
From: Toronto, Ontario, Canada
Registered: Dec 2012
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posted 11-10-2013 01:53 PM
quote: Bobby Henderson
That article, like so many others, gives Netflix and other Internet-based movie streaming services all the credit for the rapid, downward trajectory of Blockbuster video stores and other traditional "brick and mortar" stores.
Bobby, there were a number of factors that caused the long slow collapse of Blockbuster. At one time Blockbuster was sold for $8 billion dollars, they also had close to 9000 retail stores in North America.
The most significant factor of the eventual fall of Blockbuster was the change from rental revenue sharing to street date sell through for DVD. When they moved away from revenue sharing, they opened up the market to sell DVDs for cheap everywhere. At one time, Blockbuster had the opportunity to keep the deal with studios but declined to do the rental share with the studios. During this era Blockbuster accounted for 50% of the studios home video income.
What Netflix has done is impressive and they are becoming the dominant name in streaming along with iTunes etc. As for Redbox, they have a huge foot print and they do rent a lot of dvds, but long term they will not last as streaming will win out in the end.
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Bobby Henderson
"Ask me about Trajan."
Posts: 10973
From: Lawton, OK, USA
Registered: Apr 2001
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posted 11-12-2013 10:50 AM
quote: Terry Lynn-Stevens
Bobby, there were a number of factors that caused the long slow collapse of Blockbuster.
Yeah, but try telling that to any of the press people writing the stories about it. They're giving 100% of the credit to Netflix' movie streaming service when that is just not true. The press' collective memory of the movie rental business during the last decade is pretty crappy. The press loves to oversimplify anything to pump up drama and insult the intelligence of its readers.
Blockbuster made plenty of mistakes on its own. For example, here in Lawton Blockbuster just wasn't competitive. Their rental selection sucked compared to Hastings Music Books & Video. Hastings covered all the major studio releases and offered more independent and foreign movie content. Hastings rented non-porn NC-17 rated movies while Blockbuster didn't. Blockbuster's rental prices were typically the highest in town.
Redbox roared to prominence with $1 per day DVD rentals and Blockbuster did little if anything at all to respond. Hastings at least understood the situation and price matched Redbox along with being able to rent certain movies a month ahead of Redbox. My guess is Blockbuster's executives thought they could continue with business as usual on the strength of their brand name. They completely misunderstood the simple fact consumers couldn't give two shits about a store brand if the same product is being offered elsewhere at a much cheaper price. Redbox did that with rental discs. In more recent years movie streaming has eaten into the disc-based rental business.
quote: Terry Lynn-Stevens
The most significant factor of the eventual fall of Blockbuster was the change from rental revenue sharing to street date sell through for DVD.
The street date sell through concept actually started happening with VHS tapes before the DVD format was launched. I don't remember exactly when, but it was definitely the early to mid 1990s time frame. I have a feeling stores like Walmart twisted the arms of Hollywood studio executives to make that happen. Nevertheless, I don't think the change hurt Blockbuster very much at all. It certainly didn't put Blockbuster at competitive disadvantage with other brick and mortar video stores.
While movie buying/collecting is popular not nearly everyone is into it. For one, I think it's more of a guy thing and maybe even a slightly geeky, nerdy thing at that. There's no shortage of people out there who are perfectly happy to watch a movie once or maybe twice and then be done with it.
quote: Terry Lynn-Stevens
What Netflix has done is impressive and they are becoming the dominant name in streaming along with iTunes etc. As for Redbox, they have a huge foot print and they do rent a lot of dvds, but long term they will not last as streaming will win out in the end.
First, iTunes isn't dominant in movie streaming. They're way behind Netflix, Amazon and other services because of their closed system approach. Netflix and other rival services have their apps resident in game consoles, Blu-ray players, smart HDTV sets and various set top box devices. As for Redbox, they launched their own movie streaming service in partnership with Verizon. I have a Redbox app on my Playstation 3. I don't see iTunes there.
quote: Mike Blakesley
We have regular ol' DSL at our house and I use Amazon Instant Video quite often to watch "HD" content. Do I know what the resolution or bitrate or any of that crap is? Nope, but it looks similar to a BluRay to me on our 50" TV.
How many years have you been streaming movies, and doing so at that quality level?
I couldn't tolerate trying to stream video off the Internet several years ago when Redbox was really gaining steam. Streaming just didn't work anywhere near as well as it does today. I'm not the only one who had a big problem with it during that time either.
Streaming movies via the Internet works reasonably well for most people these days. I have AT&T Uverse Internet at my house and my girlfriend has a cable Internet connection. Streaming doesn't run perfectly on either ISP. We prefer to rent movies on Blu-ray disc. The video & audio quality is a lot better and there aren't any laggy download issues. I use my HD DVR to record/watch certain TV shows and other movies I didn't feel like renting. We'll resort to using HBO GO, Amazon Prime/Instant Video, Netflix or some other Internet source when there is no other alternative.
If it weren't for all the countless billions of dollars telcos are pouring into mobile phone networks most of us would probably much faster residential Internet connection speeds. Still, broadband connections of 3Mb/s and greater are a lot more common today than they were in the period when Redbox started installing its kiosks. In the middle of last decade Netflix was known far more for its disc by mail rental service rather than its online streaming service.
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