Foundering Blockbuster was thrown a small lifeline by Warner Home Video today in the form of a new distribution deal. Under the new agreement, Blockbuster will become the only multi-channel provider to stock all major Warner releases the day they are available.
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Warner’s titles will be offered in Blockbuster’s stores, by-mail and digital services 28 days before they will be available from rivals Redbox and Netflix.
Blockbuster CEO Jim Keyes was enthusiastic about the new Warner deal. Said Keyes:
“This gives Blockbuster a full four-week lead before either kiosk or other subscription services can offer any Warner Bros. titles,”
Merriman Curhan Ford analyst and Redbox-watcher Eric Wold had the following to say about the agreement and its effects on Blockbuster’s chances:
“While we see this announcement as an improvement to Blockbuster’s positioning, we believe it may be too late to make any dramatic changes to consumers’ core preferences … although they could potentially benefit from consumers utilizing Blockbuster as a supplemental service if absolutely necessary before the 28 days are up,”
What do you make of this new deal, Insiders? If other studios follow Warner’s lead in propping up ailing BB, could the company actually survive? How much, if any, could this hurt Redbox and Netflix?
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Leave your thoughts in the comments, and then head over to TechCrunch for an interesting take on Warner’s motivation behind the deal.
(via Home Media Magazine)
Oh wow, I’m so shocked ! (rolls eyes)
Are there any Warner releases worth seeing? What’s coming from this studio that’s worth paying the “28-day premium” to either buy or rent?
I’ve written this several times: Blockbuster is the ONLY major rental outlet which does NOT have this ridiculous “28-day delay.” If you’re an active movie viewer, you are NOT going to wait 28 days to see your new release. Sooner or later, the public will catch on and Blockbuster Online will experience a major increase in subscribers.
BB Online doesn’t really have a premium. Their 3-rental DVD plan is about the same price as Netflix. I never used Netflix’s streaming content. For one thing, the quality of streaming content is never as good as DVD. As for anything worth seeing, don’t really see anything at the moment.
this has antitrust lawsuit written all over it. warner signed its own death warrant.
Redbox should of never signed that stupid deal with them. They should of just stayed with the lawsuit.
Nearest Blockbuster near me is 20 miles away. So this deal does not affect us all.
vs 5 miles to 2 nearest Redbox’s….so I can wait the 28 day window and if it’s a movie I have to watch my PS3 has VOD and I save money on gas!
What about your mailbox? Why don’t you just subscribe to BB Online and get everything through the mail? The have a mail-exclusive plan.
The only Warner titles that are scheduled with definite release dates are:
1. Sherlock Holmes on March 30th
2. Edge of Darkness on May 11th
3. Invictus on May 18th
4.The Book of Eli on June 15th.
Other Warner titles not yet given release dates:
1. Valentine’s Day (rumored June 1st)
2. Cop Out
@JS
Thanks for the announced WB release list!
I’ve seen all of these at movie screenings, except Cop Out. Never seen Cop Out.
And watch as all six of the titles shoot to the top of the most pirated
movies of March, april and May:
Warner Bros. are idiots….
I have one Blockbuster within 15 miles of my house,
compared to 1 Hastings ( $2 a night rental) within 10 miles,
and 10 redboxes within a 5 to 10 mile radius.
Even if there was something I really wanted to see
(Book of Eli) on this list, I’ll definitely wait to pay
$2 or less rather than give BB $5 a pop to rent.
this contract is a direct violation of federal sherman antitrust act. consumers should and can file a complaint at
http://www.justice.gov/atr/contact/newcase.htm
the sherman antitrust act is as follows(as taken from the doj website):
Sherman Antitrust Act
This Act expresses our national commitment to a free market economy in which competition free from private and governmental restraints leads to the best results for consumers. This Act outlaws all contracts, combinations, and conspiracies that unreasonably restrain interstate and foreign trade. This includes agreements among competitors to fix prices, rig bids, and allocate customers, which are punishable as criminal felonies.
The Sherman Act also makes it a crime to monopolize any part of interstate commerce. An unlawful monopoly exists when only one firm controls the market for a product or service, and it has obtained that market power, not because its product or service is superior to others, but by suppressing competition with anticompetitive conduct.
in my opinion the death and dissasembly of warner is only a few filings away
Redbox and its attorneys must disagree, or they would not have reached the deal with WB that included the delay in receiving dvd’s. Personally, I also think that the studios would have won. BB on the whole offers the studios a larger margin per rental, and that’s why the studios didn’t require a delay with BB. Does not look very much any sort of conspriacy in restraint of trade to me.
That, my friend, is the very definition of antitrust.
No it is not. Not even close.
If Blockbuster goes out of business in the 4th quarter of 2010, wouldn’t the two remaining players for physical media be Netflix and Redbox? I don’t think it is a bad business model to have a selling window of 28 days for WB, but they are running the risk of alienating two of the biggest buyers of their product. At least one, I know Netflix went into the agreement voluntarily to increase their digital on-demand catalog.
BLockbuster is NOT GOING OUT OF BUSINESS….. if anything they will just move into a stand alone machines like redbox..
The blockbuster brand may not go out of business, but those who own stock in BB will be the ones rocking a zero balance. That BB is doomed.
Ask those who owned Circuit City stock. There a CC online, but they don’t see one red farthing from it.
“red farthing”!!! :-)
Limey currency values:
2 farthings = 1 halfpenny
2 halfpence = 1 penny
3 pence = 1 thruppence
6 pence = 1 sixpence
12 pence = 1 shilling
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2 shillings and 6 pence = 1 half crown
5 shillings = 1 Crown
didnt the euro replace all the aforementioned british currency?
The blockbuster brand will live on and perhaps be licensed out by an entity with no physical assets. Perhaps NCR will acquire the company and liquidate the stores. Then again Redbox and Netflix built brands based on a better mouse trap so maybe the Blockbuster brand is of little value.
i will just wait until it gets to redbox or is on tv im not driving over 5 miles to pay 7 dollars to rent one stupid movie…..i can wait a month and drive less than a mile and pay only one dollar and thats if i dont have a code to get it free lol!!!!
Sorry but if I’ve waited that long to see a movie on DVD rather than theater, I’m not going to have any trouble waiting another 28 days to see it at the rental place of my CHOICE. I stopped going to BB for good reason.
This seems like it could be illegal, like DOJFTW said. This would explain that stupid ad for The Blind Side on the Blockbuster Online site saying that Netflix and Redbox don’t have it but BB does.
For all you saying antitrust, this isn’t going to happen. Netflix & Redbox(to an extent) VOLUNTARILY are renting after 28 days. Netflix is getting more streaming movies, not sure what Redbox is getting, I think more rental DVDs. Both netflix & redbox did a business deal. If they didn’t do the deals, they could still rent Warner movies when they were released, like blockbuster
Redbox is getting a better price for the dvds than buying at a discount from a retailer like Wal-Mart.
It borders on coercion and I think Redbox has a case, but not Netflix.
Not illegal folks. Stop being silly.
um antitrust is just that antitrust. this deal with warner violates antitrust regulations. warner may not be as big as microsoft but thet are still in violation of the shermana act by offering one deal to blackbuster and denying it to its competitors allowing blockbuster to gain a market foothold. if this was planned it may even fall under insider trading if the blockbuster and warner idiots were in cahoots to raise thier stock.
Also, as a company or consumer, you can accept the situation of the anti-trust, but it doesn’t mean that others can’t sue on your behalf. And the justice department will haul their butts in just because it’s Tuesday.
Not anti-trust. Competitors are not being denied the product. Blockbuster is paying more for the product as are any other video rental place that gets it in street date.
Netflix and Redbox have both agreed to pay a reduced price per copy to get their product 28 days late. Redbox had always refused to pay full price for their product.
The Warner/Blockbuster distribution deal doesn’t mention the BlockBuster Express kiosks–so I’m wondering if the BBExpress kiosks will be subject to the 28 day delay???
I would doubt it, to be honest
So where does blockbuster express fit into this equation? Does it get the movies right away due to its linkage to blockbuster or does it have to wait the 28 days like the other kiosk operators (i.e. Redbox).
I don’t know if anyone happened to notice this, but WB DVDs in Blockbuster Express are not rental copies, and I don’t think they are copies sold in stores because there is also French writing on the DVD (Canadian DVD?) and no picture art. I don’t know what is up with that
looks like warner will get slapped with antitrust and go down in flames with blockbuster!
blockbuster is not going out of business. they are just going to screw their debt holders. they will restructure, not with help from warner who is really put their foot in their mouths but put the other foot in the great white cage at the same time.
bb will go with the kiosk model and join with ncr.
like i said bb express is the winner now and kills redbox.
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redbox will be toast soon enough.
tony
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If BB Express manages to wrestle Redbox out of business, do you think those free codes will continue? Why do you think Redbox used to have all those free codes? To get customers away from BB and other rental stores, knowing that once they’ve switched to you, it would be hard for the stores to get them to switch back.
Huh?
They have a long road to travel here my friend,
and they do not seem to be making headways;
why?
Because the nearest BB kiosk is 23 miles away from me
Duh!!!!
down with redbox
The whole, “we will start this 28 day delay so more consumers will consider buying the DVD” rant is now thrown out of the window since BB can rent the flicks as soon as it releases. Maybe when BB express starts popping up near where I live, I’ll be tempted to give them a try. Until then, it’s all theater, Netflix and redbox for me.
If Redbox had been charging a fair price per rental and paying a fair price per DVD they bought, none of this would have happened. This is a Redbox issue, not a Warner issue.
J.S…I still don’t understand why you’re not on the attack against BBExpress only charging the unfair $1 per rental like you’ve been with Redbox only charging $1 per rental… I mean, how can BBExpress keep afloat with such a business model…and what about all the dvd sales they are destroying for the studios because of such a low rental price PLUS having new releases available on day one!!! After all, all along you’ve said you weren’t against Redbox, you were against the unfair low price they were charging that devalued movie entertainment/dvd sales. Well, what about BBExpress now? Where’s your equal rant against BBExpress? ;-O
This is the Redbox site, that is why.
I have my doubts about the long term survival of BB Express anyway. It is not likely profitable at the moment.
BTW, it is not the $1.00 price tag that I have a problem with. It was the way Redbox was obtaining their DVDs at a sub-market price and then their refusal to pay the proper wholesale cost that I had an issue with.
If BBExpress can pay full price for their product and make their model work, all the more power to them. I doubt they can but we will see.
Ahh…Look at the past 10 posts on THIS site:around 4 concerning Blockbuster, 2 Netflix, 2 misc., and 2 regarding Redbox new release Tuesdays!….Think this site obviously deals with movie entertainment business issues other than Redbox kiosks and presents posts regarding other businesses for sole purpose of asking for bloggers’ opinions. Soooooo….if it’s NOT JUST Redbox you have a problem with, you can voice ALL your positive/NEGATIVE opinions here regardiing BB, BBExpress, Netflix, etc.–assuming you have negative opinions about those other than Redbox… And remember J.S., you made the comment once that if/when Redbox agrees to a 28 day delay with the other 2 big studios, you will have no problem whatsoever with Redbox!!! You and Redbox will be connected at the hip and you’ll be one happy camper! Maybe even become a spokesperson for Redbox!That day may be coming soon… :-)
Talked to some people about the deal that Warner made.
BB Express is apparently NOT included in the new deal.
The article does say, “…Warner’s titles will be offered in Blockbuster’s stores, by-mail and digital services…”. Kiosk rentals are not mentioned and are not included in the deal. New releases for BBE are NCR’s problem to deal with.
BTW, BB rent by mail service is hemorrhaging customers and expectation is BB will likely have to declare Ch.11 within the next 2 weeks.
I’ll post some more info later.
Thanks for the inside info about BBExpress kiosks being with NCR/likely not part of the new Warner distribution deal. I think it’s only right that BBExpress shouldn’t be able to only charge $1 and get new releases on day one being that the studios made such a stink about Redbox hampering dvd sales by only charging $1 for new releases on day one. BBExpress/NCR will probably be knuckled into the 28 day delay any time now….It’s only fair!!!
I believe they stated last year that they would be amenable to a 28 delay on the BBE kiosks as well.
Why has Warner not agreed or asked yet likely has to do with the small size of BBE. When they hit critical mass (8-10k machines) then they will likely impose the delay.
I suspect the studios are hoping for BBE to provide proper competition for RB since that gives them a better bargaining position. Having one company monopolize a niche in the industry has always been bad. The studios learned that when they let BB grow too big. If they had properly learned their lesson, they would have acted against Netflix much earlier too.
Though it may seem like I am a proponent of the studios, my true belief is that they pretty dumb most of the time.
Having said that, Warner new releases only constitute 5% of Netflix business so adjusting to a 28 day delay for 5% of your product if not a major catastrophe. Numbers are Redbox are much higher.
Your logic makes no sense. How was Redbox obtaining DVDs at a sub-market price? They must be stealing them from somewhere. Maybe you think that because they go to the store and pay the same price as you or I could that’s “sub-market”? No, that’s the very definition of market price. In fact, it should disturb you more that you’re getting raked over the coals when you pay $4.00 per rental. If Redbox can manage to pay people to go shopping for DVDs cheaper than to have them shipped in bulk, that means that the prices the other companies are paying are “above market.” Therefore, they charge more for rentals.
Do you fight this same fight with WalMart? They clearly pay “sub market” prices because they are able to twist arms and force suppliers to give them prices that are lower than other stores get.
Maybe you also fought for those mom-and-pop video rental stores when Blockbuster squeezed them out of business?
Tim, go back and read thru the site. This has been discussed many times before.
If wal-mart charged a ‘fair’ price years ago perhaps their wouldn’t be a wal-mart saving consumers billions a year. $1 is fair. The people have spoken.
Again, fair to the customer does not mean anything if the company offering that “fair” price is losing money.
Is Redbox making money at $1.00 a rental? Their quarterly numbers tell the story. Costs are rising faster than income.
You may like paying $1.00 but if no one can provide you with product at that price, you will either have to pay more or go without.
You’re funny. The world doesn’t have to work the way you think it should.
Hmmm, right. So your contention is that a company can survive by losing money constantly?
You are a pro fact spinner. If they generate cash are they losing money? There is even bigger cash generation if they stopped growing units. By accounting convention you are correct. From an entrepreneurial stand point you are 100% wrong. Netflix lost money for years and now they off the same service they did years ago at a lower price. Your distaste for new and cheap distribution methods is obvious.
They had negative cash flow growth in the last quarter.
This reflects the increased costs they have incurred due to having to pay a fair price for their product.
Netflix had a similar issue in that they were shipping too many discs to people. When they went to throttling, that solved their cash flow problem.
Redbox can solve their problems as well. Raise the price. They have already proven that $1.00 rentals are a failure from a business stand point.
I had been a netflix customer for 5 years with the 6 at a time plan. I have never experienced throttling. The key is to return movies so that Netflix recieves them on Monday. That way you will get the new releases.
I do not know why people complain about paying $4 for a movies rental. Ticket prices are for more than that. Those who don’t want to pick up and drop off movies can download them. Most people are making a big deal out of nothing. The market decides prices and format. Don’t forget you can always go to your local library to get movies. They are free in Pittsburgh.
We weren’t addressing growth in cash flow from operations. We were considering whether or not your lack of profits statement offered a complete picture of what is occurring at Redbox. Given the positive cash flow from operations prior to capital expenditures on new boxes I believe your statement is far from complete.
Throttling addresses the outer most part of the curve. The median user is quite profitable at this point as are incremental users. Throttling enhances profits at Netflix but doesn’t turn a money losing business into a profitable one.
‘Fair’ price. Such a funny term. Who is the judge of fair? You? Studios? Fair is what the market will bear, not what you deem correct. Is it fair I have to watch 20 mins of previews at the theater? Is it fair that refunds aren’t offered if I hate a movie? Fair is what the market will legally bear. Your notion of fair in this case is biased.
Btw I’m sure they will raise prices after they capture a bigger slice of the pie. Why would they raise prices now when the dagger is inches away from blockbuster’s heart?
Now THAT, is a good post.
Yes, fair is what the market will bear. Which is not $1.00 per night as proven by the Coinstar numbers. Spin it however you want that is the truth. When full costing is applied the numbers bear this out.
‘Yes, fair is what the market will bear. Which is not $1.00 per night as proven by the Coinstar numbers. Spin it however you want that is the truth. When full costing is applied the numbers bear this out.’
Dude your post makes no sense at all. I’m not sure that you could debate your way out of a wet paper bag.
I don’t see why BB can offer new title for mail rental but Netflix has to wait the 28 or whatever number days?? Seems like they should be able to offer in store rental but not mail rental, or there is going to be a lawsuit in the waiting from Netflix.
Netflix voluntarily took the 28 day delay. Why would they sue?
Sounds like Time Warner wants to test a higher price point (ie read revenue share) and I bet Blockbusterexpress was too stupid to realize they were the pawn in the game. Thus, if blockbuster tries to charge a premium for the disks, we will see in time how the consumer votes. And trust me, if the consumer goes for it, then in a years time Redbox will do the same. If the consumer doesn’t go for it, Blockbuster is screwed.
Man, blockbuster is dumb.
I read all of this crap about what the movie industry is trying to do, following in the footsteps of the music industry and can’t help but feel no sorrow for them. I have no pity that people are downloading movies off the internet. I don’t, but I have chosen to vote in a similar way. I have stopped buying DVDs. And I won’t pay more than $1 to rent, either. If the market reacts with their wallets, the industry will be forced to adjust. Sure, at first, they’ll keep their blinders on and make excuses for the shrinking revenue, but eventually they’ll figure out they need to correct to survive.
BBI rules,Redbox has a childish and unsustainable business model.Has no friends and will be out of business in 3-5 years.
That’s funny. You said the exact same thing about Netflix a few years ago.
Coinstar, Inc.
Founded 1991
Redbox Automated Retail, LLC
Subsidiary of Coinstar
Founded 2003
You Fail Sir.
I think it’s great, There are 5 boxes around me. I hope other company’s follow suit, the more the better for customers renting,
We have Family Video in Western PA. There are 2 stores near my house. The manager said they are renting more movies now due to the 28 day delay by Netflix and REDBOX. They have the new releases with no delays. They charge $3.00 a night to rent. I paid $3.00 once to get half price rentals for the month. Family Video has a tremendous selection with free rentals for kids movies. I stopped using REDBOX but will keep my Netflix membership because of the streaming video.