That;s for sure. Most articles on the subject say that Wal-Mart sells 40% of all DVDs sold, although some put the overall percentage lower and make only bestsellers at 40% of the market.
And the doom of Blockbuster has been seen for quite a while.
From the last link:
Ouch.
Was the Blockbuster store right next to the Tower Records?
Oof. That’s got to be up there with the Great Business Decisions Of Our Time…
The Blockbuster Video near us, having crowded out the local video store accross the street, pulled out over a year ago. Now the closest one is a couple of towns away. The local video store – which had been reduced to renting XXX movies (since that was the only arena it could compete in), briefly returned to normal video and danced on BB’s grave, before folding itself. Now we rent from Hollywood Video, the only close by video store. I’m not sure how long it will last, but it seems to be doing a brisk business.
My mother was the director of operations of a large video store chain based out of Buffalo. The owner of the chain sold it to Blockbuster about 10 years ago. He saw that the growth rate in the industry was slowing down, and that there were future threats on the horizon:
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The market was beginning to become saturated: with equipment prices dropping, VCR ownership was at its peak, and the future growth potential was limited.
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The cost of a future format change: video stores were still reeling from the VHS/Beta wars, and DVD loomed ahead on the horizon.
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Increasing competition: not necessarily from other video stores, but from grocery stores.
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Digital cable was starting to become widespread, with most systems having tens of pay-per-view channels. Video-on-demand was rare, but given the advancement of technology, it was likely to be a threat in the near future.
I actually rather like the Block-fucks-ya now. We tried to support the local video store, which had a great selection of indie, foreign, and harder to find stuff, and great recommendations, but he could never have enough selection. Once he finally pulled the plug, we went over to the darkside. We quickly signed up for the mail program and love it. The store has a pretty decent selection, and the online half has even better selection.
I kind of hope they don’t go down now- the Online offering is great if you have a local store. I am getting like 24 movies and a Wii game a month for my 17.99. It can’t possibly be sustainable, but I’ll ride it while it lasts.
This has been discussed here several times in the recent past. The general consensus is that in this case Sony chose wisely. Granted it is early to say but the number all seem to indicated that Blu-Ray will win the high def battle with HD. More studios are Blu-Ray only than HD only.
I think that the company to watch in the video delivery wars is Magnolia. They produce films for Mark Cuban and his HDNet. Cuban has been working to try and change the home video market. His feeling is why can’t someone buy a DVD of a movie walking out of the theater or download to watch at home instead of going to the theater. If he had his way, theaters will be going the way of bricks and mortar video stores.
Running a video rental chain requires a constant investment in new inventory which quickly loses its value. It doesn’t take much of a decline in the market to start a downward spiral.
Another problem is what is known in the industry as “the library” - the inventory of videos that aren’t new releases. The majority of floor space in a video store will be devoted to the library. However, the library inventory makes up only a small percentage of rentals. Video stores are paying rent on floor space for videos that relatively few people are renting. It’s a classic example of the Pareto principle at work; 80% of the rentals are of 20% of the inventory.
At first, the solution seems obvious; a video rental store stocking only new releases. However, video stores specializing in new releases have been business flops. Why? I don’t know, but a guess: the stores are physically much smaller than a typical Blockbuster or Hollywood Video, so consumers think the selection is going to be extremely limited.
Back in the 1980s, the biggest video collection I’ve seen, Tape Head Company in Salt Lake City, had a unique solution to this. The photocopied and reduced the video covers onto sheets which they laminated and hung on pegs. Their floor space was dramatically reduced, and the actual videos were compactly stored in the back. They had a huge collection, but the customer floor space was surprisinglt small.
unfortunately, they went out of business. Maybe it wasn’t such a hot idea, or maybe it was something else.
Here in Cambnridge, Mass, the fiercely independent Video Oasis does the same storrage-in-the-back method, but they put the actual boxes on display in the front, so they’re not saving space. But they’re still in business. 9And now THEY are the biggest video library I know of)
That sounds good in theory but how would it work in practice? It’s like advising a pet store owner that he should only keep puppies and kittens in his inventory - their transformation into dogs and cats is inevitable. Likewise, new releases quickly become 60 day old bargain rentals. Being as older vidoes can’t be sold off for medical experiments, the only way to get them off the shelf is to sell them as used movies. But putting movies into the marketplace at discounted prices has the negative effect of lowering their rental value. A lot of people, including myself, have no desire to rent a movie this week for six dollars when we can buy it in a few weeks for seven dollars.
Eventually, this will all be done over the wire. Blockbuster has the perfect solution for right now, and they seem to be leveraging their albatross (brick and mortar video stores) into an incentive to draw web users from Netflix, at which point they will announce a comcast partnership or somesuch. In my case, so far it has worked. But I would go back to Netflix in a heartbeat if the in-store-exchange thing went away.
I absolutely love the BB online service. I did my two weeks free on the 3 DVD at a time plan and decided to keep it. I get three in the mail, watch them, take them into the store where they are scanned (automatically noted online, too. They ship out my stuff the next business), pick out three new movies in store, go home, watch those. By the time I watch my three in store rentals, my three new mailed movies are in.
I don’t have cable so this has been a great way for my roommate and I to catch up on TV shows we haven’t seen.
Plus, something screwed up in their system and now they mail me FIVE movies at once. I’m not complaining though.
The two largest stores in my area have closed down. I don’t know if it’s the company line, but the folks told me it was due to huge rent increases. I have an inkling of what they’re doing with all the stock, though. I just got an email about the new “Blockbuster Outlet” store online.
The current business model for both Blockbuster and Netflix has no future. IMO, film rentals will soon be distributed almost entirely via internet (cable, fiber, maybe satellite and copper).
It may seem that sending DVD’s through the mail is a cutting-edge distribution method (“Gee! We don’t have to waste gas driving to the video store!”), until one realizes that a bunch of fossil fuel is still being burned up to get those flicks to your door. Using gasoline to transport discs or tapes all over the place is not nearly as efficient as sending 1’s and 0’s through wire and such.
It’s possible that BV and Netflix will adeptly maneuver themselves into the electronic distribution realm, but it is unlikely that the big studios will feel any need for a middleman anymore when they can just upload the stuff to consumers themselves.
(On second thought–I think Blockbuster is owned by Viacom (which owns Paramount, I think), and Netflix is probably affiliated with some big studio too, so maybe they WILL stay afloat if only because they’re already in bed with the studios anyway. I can’t keep track of all that dazzling synergy anymore.)
Netflix already has movies that you can watch online. Unfortunately, the selection is fairly sparse. I recently resubscribed to Netflix just so I could watch movies online, only to realize that there was almost nothing available that I wanted to see. If they can get a sizable portion of their entire library to be viewable online, then I’ll subscribe to them again in the future. (Unless someone else does it better, of course.)
Whenever there’s a large group of producers (the studios) creating different versions of essentially the same product (movies), there’s always going to be a middleman to bring it all to the consumers. Look at iTunes for an example of almost exactly the same thing. There’re far too many studios out there for consumers to track down each movie they’re interested in individually. I’m not saying it’ll be Netflix or Blockbuster that will act as the middleman, but someone will.
Yes, but distributing just the disk in a paper sleeve through the postal system is orders of magnitudes more efficient than an individual driving a few miles in a car to pickup and drop off movies.