Blockbuster (Etilities Forum) today lost 77% of its stock value when reports came out that it hired the law firm Kirkland & Ellis to help the company prepare for bankruptcy.  The reports were strongly denied by a Blockbuster spokesperson.  While acknowledging the hiring of the firm as consultant for its financing strategy, the company stated that bankruptcy was not an option it was pursuing.  We’ve documented for some time some of the growth of its competitor Netflix (Etilities Forum) and the innovation around streaming that it has implemented and future plans along streaming media.  While we are in no place to comment on the strategies of Blockbuster, we do support the company’s efforts to evaluate its options for it seems that in this changing economy, the status-quo would not be an option.  True or not, this rumor has damaged the stock and possibly tarnished Blockbuster.  As an already tarnished company, can it survive this even if the reports turn out to be false?

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We’ve often complained that whenever Blockbuster (Etilities Forum) announces new offerings, it mostly follows in the footsteps of its competitor Netflix (Etilities Forum). This time, however, we must give credit where credit is due as Blockbuster announced today that it would add video game rentals to its “Total Access” service, something that Netflix does not offer.

Currently, Total Access sends you DVDs in the mail that you return in exchange for new DVDs. You pay a monthly subscription cost, and how many DVDs you can hold on to at once depends on how much you pay. The addition of viedo game rentals to this service will initially launch as a pilot program, and if successful, it is expected to be rolled out nationwide in the 2nd half of this year.

Without specifically naming Netflix, the press release does point out that this differentiates Blockbuster from the competition: “A combination video game and movie online offering — with in-store exchange privileges — is a tremendous value and convenience offering not available through anyone other than Blockbuster.”

Currently, the best-known online gaming rental company is Gamefly, which does not offer movie rentals. This will give Blockbuster the edge of being the only company to offer both types of media in one plan.

©2008-2009, Gallop Services, Inc. All rights reserved.

Blockbuster (Etilities Forum), still trying to catch up to main competitor Netflix (Etilities Forum), announced yesterday a partnership with with Sonic Solutions to bring streaming content to home and mobile devices, including “PCs, portable media players, Blu-ray Disc players, personal video recorders (PVRs), set-top boxes, mobile phones and Web-connected television sets.”  Blockbuster had already made their push into the online content world last November when it announced a partnership with 2Wire to stream movies and TV shows to the MediaPoint Media Player.

The article does not mention how many of the Blockbuster titles will be available, or at what price.  However, given Sonic’s partnership with CinemaNow, which is expected to handle the fulfillment, we can venture an educated guess based on their current offerings:

• Download-to-own $10 to $20 for movies, $2 for TV show episodes and music videos, which can be viewed on up to 3 devices
• Pay-per-view movies from $3 to $4
• Burn-to-dvd from $9 to $15

This seems pretty well in line with current offerings by already well-established offerings like iTunes (Etilities Forum), and of course that is exactly the problem: this offering introduces nothing new in the industry.  Blockbuster seems constantly stuck in a position where all it can do is catch up.  To take significant market shares from the current leaders, Blockbuster needs more than the status quo: Blockbuster desperately needs to innovate.

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Blockbuster (Etilities Forum), the well-known movie rental company, announced on Tuesday that its customers will now be able to stream movies from the Blockbuster online library to their TV set.  The service will require a new device, the MediaPoint Digital Media Player, developped by new partner 2Wire.  The box will cost $99, which includes 25 free movie rentals.  Each additional rental will cost $1.99, for what is being called “DVD-quality” video.

Blockbuster, which has built a large consumer base during their 20+ years renting videos, has been struggling lately due to the fierce Internet-based competition in entertainment delivery services, especially that of Netflix (Etilities Forum).  Blockbuster’s move is clearly an attempt to catch up to the competition, but we cannot help but see the latest move as “too little too late.”

First, the fact that the player will deliver DVD-quality content is not a selling point, it’s a turn-off: iTunes (Etilities Forum) and Netflix both offer HD quality streaming content.  Second, they do not specify the size of their online library, only mentioning that includes “thousands of titles.”  Given the lack of specific numbers,  we can only assume that they are nowhere close to Netflix’s library of 12,000 online titles.  Lastly, their competitors have quite a head start.  The list of online entertainment providers is growing larger by the month, and a lot of them have been in the streaming business for some time: Netflix, iTunes, Blinkx (Etilities Forum), Hulu (Etilities Forum), Joost (Etilities Forum), Sling, YouTube…  Unless Blockbuster can come up with a true game-changer, all they will have going for them is their existing customer base, which has eroded significantly as consumers flocked to the early streaming services.

©2008-2009, Gallop Services, Inc. All rights reserved.

We’ve talked about the movie rental business which, as it matures, has started embracing technology and Internet services, in order to reach a broader audience and compete with the growing on-demand offerings from cable and satellite providers, as well as other digitally-delivered entertainment services.

Of course Apple’s iTunes (Etilities Forum) was perhaps the first digital entertainment provider, which migrated from a music-only format to include the delivery of movies into the home via broadband Internet.  Before long, Netflix (Etilities Forum)embraced the movement by offering online downloads of their movies as we previously reported.  As a result, Netflix grew at a skyrocketing rate while the brick-and-mortar concept of Blockbuster (Etilities Forum) slowly faded and continues to struggle.  Today, Blockbuster carries only 3.2 million subscribers while Netflix exceeds 8.4 million.

As a last-ditch effort to improve their customer numbers, Blockbuster is now offering $25 cash to each new subscriber, hoping that the promotion might help to stem the loss of revenue.   However, a reduced marketing and advertising budget could very well cost the company more than it can handle.

©2008-2009, Gallop Services, Inc. All rights reserved.