Sorry, But There’s No Way Digital Is Going To Save Blockbuster

Image representing redbox as depicted in Crunc...
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Blockbuster, the shrinking movie rental business, is hoping that a Hail Mary transition to kiosks and digital movie distribution will save it from going to zero.

That’s just not likely to happen. The odds of success are extremely low, given how late Blockbuster is to both technologies, how undifferentiated its offerings are (so far), and how distracting it’s going to be to spin down its retail business. (It recently announced that it’s closing 500 stores in a desperate bid to save $200 million.)

That didn’t stop CEO Jim Keyes from going on CNBC today to spin his plans as if they were easily achievable. (See video below.)

The most alarming exchange: About 1 minute, 15 seconds in, when Keyes tries to suggest that Blockbuster’s retail legacy will be helpful in its switch to digital.

“When you’re driving down Main Street and you see that Blockbuster brand, you know it’s the place to rent movies,” he said, as paidContent’s Joe Tartakoff relays. “The same experience we think will be true on the Internet. There will be a vast array of people offering movies. Blockbuster is a very reliable brand, so we think that the future is bright for us once we are able to make that transformation.”

Sorry, but Blockbuster’s brand carries zero equity on the Internet. That’s like making the argument that Sam Goody or Tower Records could steamroll Apple’s iTunes just because it once had a large offline presence.

Assuming digital ever gets big — so far it’s very tiny, with DVD still five times bigger — the winners are going to be the companies with the best distribution, content, technology, and pricing. There’s just no way that Blockbuster is going to win in any of those categories, let alone all of them.

Maybe, just maybe, there’s an argument to be made that Blockbuster’s legacy DVD relationships could score it some more attractive digital rental windows that Hollywood won’t give iTunes, Netflix, or Redbox. But if Hollywood is going to play nice with anyone, it might as well be the cable industry, which actually has a future, or Walmart, which sells vastly more DVDs than Blockbuster, is not shrinking, and just bought a digital movie business, Vudu.

Meanwhile, Blockbuster’s cable rivals like Comcast already have far stronger distribution — via the set-top box already in your living room, and the dedicated video pipe running into your house; Apple and Netflix are arguably leading the technology race; and everyone’s on-demand pricing and content is pretty similar right now.

How about Blockbuster’s opportunity to sell some of its stores for quick cash to pay down its debt? (As CNBC’s Dennis Kneale asks at the end of this segment.) That’s also not in the cards. Jim Keyes says Blockbuster leases almost all of its stores on “very short-term leases” — so the company doesn’t have much of a real estate portfolio.

Instead, Keyes describes this as a “stepping stone” to help shift its customers to digital solutions. Come again?

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Man Stabs Himself To Avoid Working Shift At Blockbuster Video

Image by Digiart2001 | jason.kuffer via Flickr

While most people in America are desperate for any job they can get their hands on, one man decided to do whatever it takes to avoid working a shift at Blockbuster Video:

Denver Post (via Take A Report): A 29-year-old man who claimed he was attacked and stabbed by three people – skinheads or Hispanic males – confessed Monday night that he stabbed himself because he didn’t want to go to work, Edgewater Police said today.

The man, Aaron Siebers, walked into his employer, the Blockbuster Video store at 1921 Sheridan about 6:30 p.m. Monday, and reported the attack. He said the trio was dressed in black. Siebers, of Denver, had a deep stab wound to the lower leg plus several superficial knife wounds, according to Steve Davis, spokesman for the Edgewater Police Department.

After Siebers was released from the hospital, detectives again questioned him. They confronted him with the evidence from the surveillance cameras and his changing stories about who attacked him, said Davis. At that point, Siebers confessed and told them he stabbed himself because he didn’t want to go to work, said the police spokesman.

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NCR-Blockbuster Roll Out Kiosks In NYC To Challenge Redbox

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NCR, in partnership with Blockbuster, is installing 200 movie rental kiosks in New York City drugstores — the Duane Reade chain — by the end of the year, the Wall Street Journal reports.

This is NCR’s opportunity to make an inroad against rival Redbox. Redbox movie rental kiosks are exploding around the country, but they haven’t managed to dent the New York City market.

For Blockbuster, this isn’t a big win. The company has seen its business erode as Redbox and Netflix become more popular with consumers. Because it’s only getting a license fee, it’s not going to replace the business it loses.

For movie studios, this is just more pain. They think the $1-per-day that Redbox charges is too low. They’re asking DVD distributors to wait 30 days before selling DVDs to Redbox. Redbox is suing the studios.

As more kiosks proliferate, it looks like it will be a losing battle for the studios.



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Blockbuster Collapses: Shutting Down 500 Stores In Desperate Bid To Save $200 Million

former Blockbuster Online logo (2004–06)
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Blockbuster is losing big when it comes to at-home videos, so they are cutting back on expenses and on advertising in the U.S. to make up for it.

US same-store sales fell 15.9% in the 4Q and revenue dipped 18% to $1.08 billion compared to last year.

By closing its 500 weakest stores, the video-rental company hopes to reduce expenses by $200 million, the Financial Times reports.

Jim Keyes, chief executive officer, said the company was working with Rothschild, its financial advisors, on ways to increase its liquidity, including a possible recapitalisation.

Under Mr Keyes, Blockbuster is seeking to establish its brand in rapidly emerging new channels such as digital downloads and vending kiosks.

But they’ve already been beat to the punch. Netflix and Redbox dominate market share when it comes to digital downloads and vending kiosks, and Blockbuster will have a difficult time growing in those segments.

The company ended last year with $963 million of debt. Can they make it through 2010?

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Beware of the chair

March 4, 2010

Office worker.Sitting for prolonged periods has been linked to health problems.

The science is in and it’s scary. Sitting down is bad for you – very bad. So much so that some workplaces are starting to act. Lissa Christopher, who wrote this story standing up, reports.

The time has come for office chairs to come with a health warning and ”upholstered, height-adjustable weapons of mass destruction” might not be too much an exaggeration.

Sitting for prolonged periods – and, let’s face it, few places compete with the office when it comes to opportunities to park one’s behind – is now linked to increased risk of premature death, particularly from cardiovascular disease. It is also associated with increased risk of developing type 2 diabetes and cancer. Leer más “Beware of the chair”

Diet Coke Eyes ‘Next Gen’ Consumers

Bottle of Coca-Cola Lite with Lemon
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March 4, 2010

– Elena Malykhina
Diet Coke will make an appearance at this year’s Oscars. A new 60-second spot for the soft-drink brand will debut during the awards ceremony on Sunday, March 7.

The spot is part of an ongoing campaign called “Stay Extraordinary,” and “celebrates the achievements of the next generation of Diet Coke drinkers,” per the brand, which is owned by The Coca-Cola Co., Atlanta. It will initially air during the Academy Awards, and two additional 30-second spots will be introduced next week during American Idol. (Wieden+Kennedy, Diet Coke’s lead agency, created the ads. The brand spend $30 million on advertising in 2009, per the Nielsen Co.)

Dubbed “Stay,” the new spot is structured as six vignettes showing people being extraordinary, and their relationship with the brand. These people include a nurse, a fashion designer, a movie director, and a celebrity, among others. “Drive, passion, and courage is what makes these people extraordinary,” said Katie Bayne, CMO of Coca-Cola North America. “Diet Coke helps them stay that way.”

“Stay Extraordinary” launched last month, along with the 2010 Diet Coke Heart Truth program, which raises awareness for women’s heart health programs. Marketing support for the program includes special packaging, TV and print ads, as well as digital and retail. Those TV ads aired during the broadcast of the Olympic Winter Games.

The Oscars will mark the next phase of that campaign. “We looked at the Academy Awards to launch our iconic work,” Bayne said. Leer más “Diet Coke Eyes ‘Next Gen’ Consumers”

La Fageda: la empresa de discapacitados que amenaza a los yogures de Danone


“Hola, me llamo Cristóbal Colón, vengo de un manicomio, con 14 enfermos mentales y queremos montar una empresa”. Efectivamente, aquel psiquiatra se llamaba Cristóbal Colón y, efectivamente, iba acompañado de 14 internos del Psiquiátrico de Zaragoza. La frase era una declaración de intenciones a un alcalde de una población de La Garrotxa y hoy, 18 años más tarde, esa empresa es La Fageda, la tercera compañía de postres lácteos de Cataluña.

“No teníamos nada que perder. Lo único que podía pasar era que el proyecto no saliera adelante y volviéramos al manicomio”. El psiquiatra, después de diez años trabajando en el Hospital mental de Zaragoza, se dio cuenta de que “el trabajo podía ser la vía para reconstruir la vida de estas personas”.

Cristóbal Colón contó ayer en Innosfera, en La Casa Encendida de Madrid, esta historia que comenzó en un despacho del alcalde de una localidad de La Garrotxa. Eran años de crisis y no consiguieron financiación, pero les dejaron un local. Establecieron allí su sede y, “sin tener un modelo de negocio claro”, empezaron a hacer “figuritas del niño Jesús”. Leer más “La Fageda: la empresa de discapacitados que amenaza a los yogures de Danone”