Posted on 01/02/2005 11:07:50 AM PST by MississippiMasterpiece
It's quite an epic, watching Blockbuster die.
The nation's No. 1 video chain hopes to prolong its life with a hostile bid for the No. 2 video-store chain, Hollywood Entertainment. But make no mistake - it's dying. The whole video- store industry is dying, too. Meanwhile some high-rolling financiers are picking over the corpses.
Renegade capitalist Carl Icahn has emerged as the largest investor in both Texas-based Blockbuster and Oregon- based Hollywood. Icahn is trying to put the chains together in a $1 billion deal. He'll most likely try to turn a fast buck with synergies, economies of scale, cost- cutting, restructurings, refinancings and perhaps a little bit of that old-time merger accounting.
Before Icahn's move, Leonard Green & Partners, a storied California-based investment group, bid for Hollywood. The firm, however, lowered its offer after having a close look at the books.
Alabama-based Movie Gallery, the No. 3 chain, also made an offer for Hollywood. So now, there's a testy little auction - replete with hostile takeover threats - making regular headlines.
The truth is that combining Hollywood with any other video-store chain is like handcuffing two drunks together. They could prop up each other for a while, but they are bound to stumble.
This is why entertainment giant Viacom divested itself of Blockbuster in October. Viacom's brass said they believed Blockbuster would be better off on its own. What they meant was that Viacom would be better off without Blockbuster.
Shortly after the spinoff, Blockbuster took a $1.5 billion charge against earnings to account for its declining value. As a result, Blockbuster posted a $1.26 billion loss on $4.33 billion in revenues for the first nine months of 2004.
To be sure, Blockbuster, Hollywood and other video stores still throw off plenty of cash and have seized video games as a new source of revenue. But their glory days are long behind them.
One reason they are still alive is because cable and satellite providers have failed to deliver a respectable array of competitively priced pay-per-view choices.
Another reason is that movie studios have propped up video stores as cash cows. Studios send their movies to theaters, then video retailers, and then to TV outlets. The window when new releases were only available in video stores gave Blockbuster its appeal.
But movie studios have learned they can make more money by flooding the market with inexpensive DVDs for sale at the same time they release them to video stores for rent.
That gives consumers an intriguing choice: Why pay $4 to rent when you can buy for $12 to $20 and not worry about pesky late charges while building up a personal video library?
Cheap, lightweight DVDs are easily mailed, too. This feature gave rise to Netflix, which pioneered the online, mail-order subscription model. Unfortunately, this idea is so widely copied - by Wal-Mart, Blockbuster and soon even Amazon.com - that Netflix's days are also numbered.
Meanwhile, McDonald's is experimenting in Denver with kiosks that dispense rental DVDs for $1 in a bid to drive traffic to their food counters. Supermarkets, pharmacies, convenience stores and bookstores also sell or rent DVDs for the same reason.
Then there's TiVo and other digital video recorders, including ones from Comcast and EchoStar. Why suffer long lines and slow-witted clerks at Blockbuster when you can record what you want from TV and fast-forward through commercials?
Just before Christmas, Blockbuster said it would lower its monthly fee from $17.49 to $14.99 for its Netflix-like service. That announcement came shortly after Blockbuster said it would cut late fees for in-store rentals. Blockbuster said it expects to lose income of between $250 million and $300 million for 2005 as a result of eliminating late fees.
Imagine that. Taking a quarter-billion dollars a year from customers who are too busy, too lazy or too forgetful to return their videos. This is a business model that deserves to die.
I don't believe you are alone.
In my opinion the quality of the product has degenerated to a point that the retailers of those products are having trouble selling the product.
It is Mentura (you were close). A lot of families on the Classical homeschooling message board to which I belong use it and like it a lot.
We just signed up for DISH network. It gets installed on Thursday!! WooHoo.
VOOM is the best at HD content. I believe DirecTV is getting there with TIVO but there are content issues and recording via DVI or firewire between studios releasing their content and satellite providers.
The market is getting quite complex with HD.
I can't justify p****ing away ten bucks for a movie ticket, $7.00 for popcorn and soda, and sit through a two hour movie with kids chattering and shining their effen laser pointer up at the screen. No thanks, I think I'll stay home and watch them.
"In my opinion the quality of the product has degenerated to a point that the retailers of those products are having trouble selling the product."
Did you know that studios sometimes can make more revenue in video release than it can running it in a theater? Troy, ST Nemesis two I can name off of the top of my head.
I've been a loyal customer of DISH for nearly 8 years. They sent a note in my last bill saying I can upgrade my equipment if I so choose. I've got my eye on a dual tuner receiver. I've been wanting to get satellite TV in my computer room without the added expense of another dish and receiver and two satellite bills.
I still like Spiderman, Harry Potter, LOTR, and Star Wars type movies, but most of what is out today is just inane and worthless.
Not to mention politically correct. Often it isn't the gratuitous sex & violence that bothers me, but the ideas. They're incredibly liberal and distorted. Also, I've seen some very weak plots.
I've been feeling alienated from Hollywood for quite some time. Maybe, as you said, age has something to do with it. I might be outgrowing movies. And I have better things to do with my time, anyway.
That is why I buy my DVDs, Vision. For my tastes, there may be one good film a year that I would go to the theaters for.
Modern "trailers" for new films are basically a "Short Attention Span" synopsis of the film. You see the "Money Scenes". Why bother sitting through the whole film?
I have plans for buying "Master & Commander" when "Team America" or "The Inceredibles" come out in DVD. They'll join my predominantly B&W and 1970s heavy collection of films and Television series.
Jack.
Yes, I became aware of that about 6 months ago.
I believe the lack of response in theaters was an earlier sign of the same problem, allowing, as Big Sky points out, excessive theater prices another problem discouraging attendance.
Two recent examples come to my mind, I. Robot and Van Helsing. Two of the dumbest movies in recent memory I ever saw. If it weren't for the special effects, both movies wouldn't be worth anyone's time or money.
A cool thing about the system is that I'm ordering a few movies a month that I suspect I probably won't like, but I can afford to at least watch the first few minutes and find out for certain.
Couldn't finish that "Spotless Mind" thing...
Movies take so long and are so expensive to produce, compared to books and music. There are several hundre English language movies made every year, but I will never see more than a dozen of them, even on TV. In a normal Year I see about four movies in the theater and about two a month at home.
I realize I am unusual, but even movie fans have limits. It's like eating candy. Everyone eventually reaches a point where they don't want more. I think movies might reach this point, at least in rentals.
One market not exploited is old movies. I would buy old movies at the right price. Five dollars is about my limit. I would not rent them at any price if I have to worry about late fees.
"excessive theater prices another problem discouraging attendance."
I think there's more... like home theater becoming less and less expensive. And the cost of owning movie titles becoming less and less and in better and better electronic formats.
I love my Hitachi 51 HDTV and my Onkyo receiver and watching a movie on DVHS at 1080i in the comfort of my own home. Or a HD movie from VOOM at 1080i with DD.
Master and Commander has been available on the DVD format for months.
TIVO!
Watch it as many times as you like.
I thought I Robot and Van Helsing were great and own both on DVD. To each his own.
Oh, boy.....that was a good one. You're funny.
No, I am not. The contract itself does not require me to return the movie within the initial time period. Rather, it allows Blockbuster to impose late fees if I do not. There's a difference.
Just because you're either too laxy or too incompentent to follow rules -- rules you knew of and agreed to ahead of time -- doesn't make the rules wrong
Read my post again. I don't have a problem with the rules. When Blockbuster changed their late fee structure, I altered my behavior accordingly. And, I suspect, so did many other folks; and as a result, they lost money. It's that simple.
Follow the rules or don't b**ch.
Again, nobody here has discussed breaking the rules. It is not breaking the rules to keep a video late, as long as you pay the late fee. It is breaking the rules if you keep a video late, and refuse to pay the fee. And of course, if you do that, Blockbuster will rightly cease to do business with you.
I am a CPA. I play by the rules and I get frosted beyond all belief when people CRY that 'It's so unfair!'.
I pity you.
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