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Bonds Are a 'Safe' Investment: A Big Lie Gets Even BiggerThe business of renting movies from stores just got a generation older. Too bad for Blockbuster (NYSE: BBI). Netflix (NASDAQ: NFLX) knows that even sending DVDs by mail will not serve consumers needs during the broadband era. It is ramping up its plans to allow customers to get content over the internet.
According to The Wall Street Journal, a Netflix spokesman said "we know the future belongs to instant watching, to streaming to your TV." While the story may seem to be about Netflix and download services from other companies including Apple (NASDAQ: AAPL) and Amazon (NASDAQ: AMZN), it is really about the death of Blockbuster.
The old-line movie rental store company's stock trades for $2.28. That is down from well over $20 five years ago.
Streaming movies may take another year or two to become part of the entertainment habits of most households, but cable has already put instant VOD into many homes. The market for "content now" is already here and will soon be crowded with competition.
Blockbuster has no way to combat the coming wave even it if it is still out at sea. The firm's days are numbered, which means its shares are going to move even lower.
Douglas A. McIntyre is an editor at 247wallst.com.
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Reader Comments (Page 1 of 1)
9-10-2008 @ 11:42AM
Henry Postigo said...
I already saw this coming. I thought of the idea of why we could never get the movie we wanted on demand. Then cable started offering it. However, I like to have my movies in hand. Send them to my ipod, watch them whenever I can. It will take some years for blockbuster to get out of business, but those years are not too far way.
9-10-2008 @ 12:14PM
zane varvel said...
VOD has been around since the turn of the century. It sucks.
You looked at the quote summary and made generalizations.
2 years? Thats laughable...Netflix can only stream 10% of their titles. Their brand recognition isn't 1/4 of Blockbuster, plus, if Netflix doesn't grab majority of eventual streaming, they have nothing else to sell. Blockbuster can sell games, hardware, services, etc.
If Blockbuster's sales were decreasing, you might be right. They're not, they're increasing.
9-10-2008 @ 2:53PM
GeorgeS said...
I don't see why Blockbuster should totally fold. It's a valid business serving existing needs. That's like the stupid predictions about a paperless office, or cashless society, or unemployment over 50% because of mechanization. Okay so rentals may go down, but it's in a good position to keep serving.
9-11-2008 @ 12:39PM
TomC said...
I don't know what rock Mr. McIntyre crawled out from under but he completely missed the fact that Blockbuster has launched its movie downloading from its site, added movie kiosks (and is adding more), revamped its stores to provide more games and movie purchases and will even have kiosks that will allow movies to be downloaded to mobile devices. Blockbuster provides a four-pronged approach to movie rentals to Netflix's two-pronged approach. Blockbuster's brick and mortar is a competitive advantage that Netflix does not have. Better utilization of those assets is what will rebuild the Blockbuster brand and their stock position.
Also, if Mr. McIntyre doesn't think Blockbuster has plans for VOD, then he's drinking Netflix KoolAid.