For some reason, Dish Network has chosen to drop $320 million on the purchase of Blockbuster, Inc. No one is quite sure what Dish Network intends to do with Blockbuster, but one might imagine that Dish Network could use this as an opportunity to create a big brick-and-mortar retail presence. Dish Network could be trying to position itself to better compete with Netflix by being on the street and in the mail in addition to the skies.
By taking over Blockbuster's existing infrastructure, retail presence, customer base, relationship with movie studios, and merchandise supply channels, Dish Network now has the tools to become a potential threat to companies like Netflix. Dish Network could now be in the unique position of being able to deliver all kinds of movies to all kinds of consumers in all kinds of different ways. What other company has all of that? Redbox has the rental kiosks. Netflix has DVDs by mail and streaming video. Many retail stores sell videos. The pay TV channels and many other services offer video-on-demand. Up until now, no one company has been able to offer it all, and no one company has been able to reach what is nearly the entire market of video renters/buyers. Perhaps Dish Network will try to be the first to make that happen.
Considering the harsh realities that Blockbuster had been facing, this deal is probably as good as it could get for Blockbuster. If Dish Network does wish to build a strong retail presence, they will probably not be liquidating Blockbuster (which had been an extremely likely possibility). If Blockbuster continues to exist in brick-and-mortar form, many Blockbuster employees may be able to hang on to their jobs for a while. Consumers will also not have to face losing one of their video rental options.
Not much is certain at this point, but the Dish Network takeover is probably being viewed as at least moderately encouraging news for anyone who likes Blockbuster or depends on the company for a living.
2/21/2011
Troubled Video Rental Chain for Sale
Blockbuster is up for sale, and bidders are welcome. If you have a little extra money, and you are looking to sink it into a company with a tainted brand name, a Chapter 11 filing, and no clear path for regaining its market footing, this may be your opportunity.
Seriously, the number on the table as of today is $290 million. Blockbuster is hoping to sell for at least that much. It is unclear exactly why anyone would want Blockbuster. Perhaps the purchasers are interested in liquidating the company.
How many scratched DVDs and barely touched Blu-ray discs does it take to add up to $290 million anyway? If Blockbuster can unload the used discs for an average of $5 a piece, they will need 58 million of them to hit the $290 million mark. That sure seems like a lot of used discs.
Blockbuster does have more than used video discs, however. Blockbuster has all of that overpriced candy, drinks, and popcorn. Do not forget about all of the stuffed animals, key chains, and those framed movie posters no one ever touches.
No one is sure what is going to happen to Blockbuster, but it looks like Blockbuster is moving ahead quickly. Probably, by the end of April, we will find out who is buying Blockbuster and for what price. After that, we will either be treated to a tremendous reincarnation/re-branding of Blockbuster or the most massive clearance sale of used DVDs, games, and movie-related merchandise the nation has ever seen.
The sad thing is that very few people care. Not many people were upset when Blockbuster went Chapter 11, and there will not be that many people upset if Blockbuster is transformed or liquidated. How often do you hear someone praising Blockbuster, or excited about making a trip to a Blockbuster store? It's pretty rare, isn't it? That is the real problem. Most people just do not care about Blockbuster anymore, and why should they?
Seriously, the number on the table as of today is $290 million. Blockbuster is hoping to sell for at least that much. It is unclear exactly why anyone would want Blockbuster. Perhaps the purchasers are interested in liquidating the company.
How many scratched DVDs and barely touched Blu-ray discs does it take to add up to $290 million anyway? If Blockbuster can unload the used discs for an average of $5 a piece, they will need 58 million of them to hit the $290 million mark. That sure seems like a lot of used discs.
Blockbuster does have more than used video discs, however. Blockbuster has all of that overpriced candy, drinks, and popcorn. Do not forget about all of the stuffed animals, key chains, and those framed movie posters no one ever touches.
No one is sure what is going to happen to Blockbuster, but it looks like Blockbuster is moving ahead quickly. Probably, by the end of April, we will find out who is buying Blockbuster and for what price. After that, we will either be treated to a tremendous reincarnation/re-branding of Blockbuster or the most massive clearance sale of used DVDs, games, and movie-related merchandise the nation has ever seen.
The sad thing is that very few people care. Not many people were upset when Blockbuster went Chapter 11, and there will not be that many people upset if Blockbuster is transformed or liquidated. How often do you hear someone praising Blockbuster, or excited about making a trip to a Blockbuster store? It's pretty rare, isn't it? That is the real problem. Most people just do not care about Blockbuster anymore, and why should they?
2/10/2011
Blockbuster Online's Processing Decoy Tactic
It appears Blockbuster Online has begun favoring a particular throttling tactic. This one is the processing decoy tactic. Blockbuster will tie up your queue for an extra day by holding a DVD in Processing status overnight and then canceling shipment of the DVD the following morning. Here is an example of how it works.
Blockbuster might think they are being clever with this tactic, but they are only annoying subscribers. We all know Blockbuster Online generally knows whether it can ship a particular DVD or not. Those DVD envelopes and sleeves are barcoded and tracked through their inventory system. Yes, sometimes returned DVDs arrive damaged or in the wrong sleeves or envelopes, but generally Blockbuster knows what DVDs it has in its shipping centers. If Blockbuster is going to throttle subscribers, Blockbuster needs to stop playing games and just be straightforward with it.
- On Monday morning, you have an empty slot in the At Home section of your Blockbuster Online queue.
- Later that day, Blockbuster will move one of your most desired DVDs (normally one with an Availability status of Long Wait or Very Long Wait) to the empty slot in the At Home section of your queue. This DVD will be tagged as Processing.
- The DVD will sit in your queue for the rest of the day and into the night with the status of Processing.
- The next morning, the DVD will have mysteriously been moved from the At Home section of your queue back down to its original position in your list of desired DVDs. This leaves an empty slot in the At Home section of your queue.
- Later that day, the empty slot will likely be filled with a different DVD from you queue. That replacement DVD is likely to ship that afternoon.
This throttling tactic is bad for you for two reasons. 1) The delay automatically adds at least one day to your turnaround, reducing the number of DVDs you can receive during the subscription month and thereby reducing the value of your subscription. 2) By holding one of your most desired DVDs in Processing status, Blockbuster is discouraging you from renting that title from another source for at least one day. You will probably not rent a DVD from a Blockbuster store, Redbox, etc. if you believe Blockbuster Online will be shipping that DVD to you in the immediate future.
Blockbuster might think they are being clever with this tactic, but they are only annoying subscribers. We all know Blockbuster Online generally knows whether it can ship a particular DVD or not. Those DVD envelopes and sleeves are barcoded and tracked through their inventory system. Yes, sometimes returned DVDs arrive damaged or in the wrong sleeves or envelopes, but generally Blockbuster knows what DVDs it has in its shipping centers. If Blockbuster is going to throttle subscribers, Blockbuster needs to stop playing games and just be straightforward with it.
Come on, Blockbuster, don't be such a tease. Just leave those shipping slots empty until you are satisfied with how much extra money you have milked from the subscribers. Irritating your last few loyal customers is not a good way to pull yourself out of bankruptcy.
11/17/2010
Blockbuster's Blu-Ray Disc Rental Figures May Be Flawed
If you are a Blockbuster Online subscriber and you exchange your online rentals at stores for store rentals, you may have noticed that, sometimes, your store DVD rentals show up as Blu-ray discs in the At Home section of your Blockbuster Online queue. This commonly occurring error does not necessarily prove an inventory flaw; however, the error strongly suggests that Blockbuster inaccurately records some store DVD rentals as Blu-ray disc rentals.
If you do a lot of store exchanges and typically choose the DVD format, look in your Blockbuster Online rental history. There you may find several titles tagged with the [Blu-ray] tag. Depending on your rental preferences, you may notice that few or none of these supposed Blu-ray discs you rented from Blockbuster stores were really Blu-ray discs. They were just improperly tagged DVDs. Even more curious, this error seems to occur disproportionately often among new releases. Perhaps this is just a recent problem affecting only newer titles.
What is uncertain is whether or not Blockbuster is tagging discs inappropriately on purpose for some reason or if this is just another example of Blockbuster's incompetence. Regardless, many DVDs are being tagged incorrectly as Blu-ray discs in at least one system. If these errors are being carried over into other systems, such as the systems that provide data for inventory reporting and sales reporting, Blockbuster's numbers could be showing dramatically inflated figures for Blu-ray disc rentals.
There do seem to be stacks of unwanted Blu-ray discs just sitting on the shelves at Blockbuster stores. The excessive Blu-ray disc supply could stem from improper inventory reporting, or the improperly tagged discs could be concealing that Blu-ray discs are not terribly popular among Blockbuster store customers. Regardless, Blockbuster needs to get their act together and consistently tag DVDs as DVDs and Blu-ray discs as Blu-ray discs in all of their systems.
Imagine if you lost a store DVD that was electronically mislabeled as a Blu-ray disc. Would the store charge you the lower DVD price or the higher Blu-ray disc price? That could be an unpleasant surprise. If you lost the physical disc, you would have no proof it was a DVD, and you would be at the mercy of Blockbuster's inaccurate computer system.
If you do a lot of store exchanges and typically choose the DVD format, look in your Blockbuster Online rental history. There you may find several titles tagged with the [Blu-ray] tag. Depending on your rental preferences, you may notice that few or none of these supposed Blu-ray discs you rented from Blockbuster stores were really Blu-ray discs. They were just improperly tagged DVDs. Even more curious, this error seems to occur disproportionately often among new releases. Perhaps this is just a recent problem affecting only newer titles.
What is uncertain is whether or not Blockbuster is tagging discs inappropriately on purpose for some reason or if this is just another example of Blockbuster's incompetence. Regardless, many DVDs are being tagged incorrectly as Blu-ray discs in at least one system. If these errors are being carried over into other systems, such as the systems that provide data for inventory reporting and sales reporting, Blockbuster's numbers could be showing dramatically inflated figures for Blu-ray disc rentals.
There do seem to be stacks of unwanted Blu-ray discs just sitting on the shelves at Blockbuster stores. The excessive Blu-ray disc supply could stem from improper inventory reporting, or the improperly tagged discs could be concealing that Blu-ray discs are not terribly popular among Blockbuster store customers. Regardless, Blockbuster needs to get their act together and consistently tag DVDs as DVDs and Blu-ray discs as Blu-ray discs in all of their systems.
Imagine if you lost a store DVD that was electronically mislabeled as a Blu-ray disc. Would the store charge you the lower DVD price or the higher Blu-ray disc price? That could be an unpleasant surprise. If you lost the physical disc, you would have no proof it was a DVD, and you would be at the mercy of Blockbuster's inaccurate computer system.
9/23/2010
Blockbusted: Blockbuster Files for Chapter 11 Bankruptcy Protection
Blockbuster has filed Chapter 11. This is barely news, because we have all been seeing this coming for a couple of years. The reasons for the bankruptcy are fairly obvious: debt, outdated business model, alienated customers, constantly shifting pricing structures, unpredictable rental policy changes, tainted brand, etc. The question should not be, "Why did Blockbuster go Chapter 11?" but "How did Blockbuster stay out of Chapter 11 for so long?"
Now, what does all of this mean for you? If you are a common shareholder, you are probably about to get screwed and lose your investment. If you are a customer, things are less certain. Chapter 11 is a reorganization status. Blockbuster is not shutting down at the moment, but the company is likely to spend the coming months trying to restructure their organization into a profitable business. Look for a lot of store closings, changes in policies, changes in pricing, changes in store inventory, and changes in ways of doing business. (Wow! That sounds like business as usual for Blockbuster.) Maybe these changes will benefit the customers. Maybe the changes will be a big headache for customers. The good news is that you have choices. If Blockbuster changes in ways you do not like, just go somewhere else.
This Chapter 11 filing gives Blockbuster one last chance to get things right. If Blockbuster can take advantage of this opportunity, they might be able to figure out a way to please customers while being profitable. If Blockbuster cannot figure out how to rehabilitate their business model, then the eventual end of Blockbuster in inevitable. We will just have to wait and see.
Now, what does all of this mean for you? If you are a common shareholder, you are probably about to get screwed and lose your investment. If you are a customer, things are less certain. Chapter 11 is a reorganization status. Blockbuster is not shutting down at the moment, but the company is likely to spend the coming months trying to restructure their organization into a profitable business. Look for a lot of store closings, changes in policies, changes in pricing, changes in store inventory, and changes in ways of doing business. (Wow! That sounds like business as usual for Blockbuster.) Maybe these changes will benefit the customers. Maybe the changes will be a big headache for customers. The good news is that you have choices. If Blockbuster changes in ways you do not like, just go somewhere else.
This Chapter 11 filing gives Blockbuster one last chance to get things right. If Blockbuster can take advantage of this opportunity, they might be able to figure out a way to please customers while being profitable. If Blockbuster cannot figure out how to rehabilitate their business model, then the eventual end of Blockbuster in inevitable. We will just have to wait and see.
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