Blockbuster Gets Bailout Deal From Warner Brothers
Posted by Craig Kessler on March 25, 2010 at 2:30 am
Bailouts are taking over the country as a way to help out the big boys stay in business and rework themselves with the competition. We saw the US government bail out the banks, now we are seeing the same thing happen with the movie industry. I have spoken a lot recently about Blockbuster’s bankruptcy problems and how the one time mega movie rental company is struggling to make ends meat. But Hollywood flew in to the rescue to help the big dawg stay afloat.
Warner Brothers recently pressured companies like Netflix and Red Box into delaying sending the companies their latest DVD releases for 4 weeks to hopefully persuade customers to buy DVD’s instead of rent them. Now Warner Brothers went ahead and made a deal with Blockbuster allowing the company to rent out new DVD’s and Blu Ray movies to customers four weeks before Netflix and Red Box. They will just be getting the new DVD releases the day the movie comes out, which could persuade customers to flock to Blockbuster to rent a new release.
Here’s BB CEO James Keyes in an interview on this deal with Bloomberg: “The studios appreciate that we are the only business that has the ability to offer cross channels…That enables us to give consumers access to movies when they want it and where they want it.”
I don’t know the specific outlines to the deal, but am unclear of why Warner Brothers would make this deal. Unless Blockbuster is paying them some ridiculous amount of money (which there is no way the company could afford it) what is the benefit to Warner Brothers? Blockbuster going out of business doesn’t hurt the movie rental business, it just is adapting in new directions. For Blockbuster, this will help in the short run, but inevitably the company will be hitting the tanks sooner than later. This may delay it a few months, but customers of Netflix and Red Box are not going to be going to Blockbuster in the masses just to rent a new release a few weeks earlier.
What are your thoughts on Warner Brothers making this deal with Blockbuster?
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Three cheers for Warner Bros. Blockbuster is an amazing chain and it would be very sad to see them go.
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@Travis They are an amazing chain and have loved them for years, but it seems even with this delay things are going to change. I have a feeling they will eventually just get rid of all the stores and be completely digital and mail as well.
They only did this so that Netflix doesn’t gain a monopoly. If BB survives, which will be miraculous by the way, it will prevent Netflix from obtaining a monopoly over the rental industry. This will spark competition and hopefully bring new life to the DVD purchasing world. If Netflix gains a monopoly, which is likley, it will be the end of DVD purchasing as we know it. Hence, Warner Bros makes this move.
Yeah, but Matt, until Netflix came along Blockbuster basically had a monopoly on video rentals. No other rental chain could come close to their rentals and sales numbers. To say that WB would really care one way or another about DVD rental monopolies is a leap. And, honestly, Blockbuster isn’t the only place you can purchase DVDs, and I’m willing to bet that the largest number or DVD sales don’t come from Blockbuster locations, but from places like Best Buy and Amazon. Email rentals and streaming aren’t going to end DVD purchasing, just as Blockbuster rentals didn’t.
I honestly don’t care if Blockbuster goes under. They certainly had no problem cornering the market in the 90s and driving all the small mom-and-pop and small chains out of business, much like Wal-Mart has done in small communities around America. Blockbuster’s problem is that they didn’t seen Netflix as a threat a decade ago and were too late to adjust their business model accordingly. It was poor management at the top, and now they want to be bailed out so they don’t go under like all the people they put out of business twenty years ago. Well, boo frickin’ hoo to Blockbuster. I say adios.
Blockbuster should go under. It has been a scab on our society for too long and the CEO is playing everyone for fools.
@Nomo I don’t think it should go under because they have been a scab, but just that in the business world if the company is bankrupt and aren’t adapting to the times, they will be forced out and shouldn’t get a bailout.
Either way, Blockbuster has no chance…