Monday, April 14, 2008

Blockbuster Won't Give in; Bids for Circuit City

For years, it seemed like the writing was on the wall for movie rental outlets like Blockbuster. First, there was on-demand TV through cable services that essentially let you order a movie right from your couch. Then, there was nifty inventions like TiVo that made it really easy to record a movie at 4 a.m., then watch it whenever you felt like it. As if that weren't enough to put pressure on the traditional DVD rental business, out came Netflix, a company that let you order a movie online, and they'd deliver it right to your door!

Lately, however, it seems like Blockbuster is pulling out all the stops to ensure that the company isn't left in the dust as technology continues to move forward. We've already seen what happened to music retailers like Music World and Sam The Record Man that refused to change their business plans to keep up with the changing ways of music distribution. Blockbuster obviously wants no part in that when it comes to its business, and is making sure the company stays on the cusp of development.

The strangest move came today, when Blockbuster Inc. put in a bid to buy U.S. consumer electronics retailer Circuit City. Huh? You'd think that, if anything, it would be the other way around! But Blockbuster is offering more than US$1-billion for the mammoth CE retailer, stating that a combined company (worth approx. US$18-billion) would be "uniquely positioned to capitalize on the growing convergence of media content and electronic devices." Could we see Blockbuster stores now not only renting DVDs and video games, but also the devices needed to watch or play them? Or perhaps creating promotions whereby you receive a free movie rental with the purchase of a Blu-ray player from Circuit City? It might even be more than that.

Reports all over the 'net claim that Blockbuster is planning to launch its own set-top box that would allows users to stream movies to a connected TV, a la Apple TV. Content would reportedly come from Movielink's massive library, a company that Blockbuster purchased last year.

It looks like Blockbuster has finally bitten the bullet and realized that it needs to make bold moves in order to remain competitive, and not be eaten up by all the new players. In addition to its attempt to buy Circuit City and the rumoured set-top box device, Blockbuster has also been ramping up its Blu-ray DVD offerings to keep in line with consumer demands. It's even putting dedicated Blu-ray kiosks in store, demonstrating the quality of Blu-ray versus standard DVD.

Most people seem puzzled by Blockbuster's moves, but it's better than sitting back and watching other companies take over an area where you were once king. Kudos to Blockbuster for taking steps to improve, and for attempting to find interesting synergies that will add further value to its business. Sure, a consumer electronics retailer is very different from a DVD rental company, as many reports have pointed out. But maybe there's more synergy between the two than we realize. If, as I've argued many times, the content drives the hardware, it makes perfect sense for Blockbuster to grab a piece of the hardware pie to complement its diverse software offerings.

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1 comment:

Lee_D said...

Great minds think alike, Christine.