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Blockbuster Looks at Digital

BetaNews has an article reporting that Blockbuster’s CEO hinted they were looking at ways to digitize their business. Losing a lot of market share to rivals, Netflix being the largest, they are looking at two issue sthey face. First, their huge installed base of stores gives them almost ubiquitious presence, but is overhead that a company like Netflix just doesn’t have. Second, in order to rival Netflix in the long term, they need to do more than just duplicate their service.

Being able to offer their movies digitally would eventually solve both issues. While Netflix gets movies to most customers in a day or two, digital delivery could be a matter of minutes. Blockbuster is already an investor in the online video service CinemaNow, however CEO John Antioco said a profitable business model has yet to emerge in that space. 

The one piece of the equation that is yet to be determined is the delivery system. Using their customer’s high speed internet service leaves out a large percentage of the population. Using cable TV would not be reasonable, since the cable companies are already using that for their own video on demand solution. As the CEO’s quote above makes clear, they don’t have a game plan for creating a profitable business at this point.

An interesting point to note is that they are not the only company looking to offer digital content. Reuter’s is reporting that Amazon is reportedly in ongoing talks with Hollywood movie studios in order to be able to offer digital downloads that could be copied onto DVD’s. The major difference is that the customer would own the movie at that point, not use it as a rental service. The viability of that solution will all depend on the price points they use to offer this service. And it would be yet another competitor to Blockbuster and any plans they have for the future.

Posted by Jeff



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