Hacking Netflix ponders whether the "Death of Blockbuster" stories greatly exaggerate.
I hardly think we've seen the last of Blockbuster, but they do have a tough road ahead of them. Blockbuster Chairman Jim Keyes is just getting started, and he might have saved the company by pulling out of the expensive online war with Netflix. With Movie Gallery out of the way, refocusing on stores and getting more revenue (from) their 20 million monthly customers makes sense in the short term. Keep in mind that it's going to be a while before DVD goes away (and my Dad watches a movie online).
This latest round of the Blockbuster deathwatch was largely kicked off by Blockbuster's Q3 earning Webcast during which it was revealed that the company had lost about 500,000 Total Access (DVD by mail) subscribers. CEO James Keyes suggested that some were unprofitable subscribers, but then you'd probably expect him to say that. In any case, Blockbuster appears to be pulling back (but likely not exiting) from its mail operation to concentrate on its brick and mortar stores.
One often hears about B&M being dead or the DVD being replaced by online downloads. I don't buy either assertion, at least for any reasonable planning horizon. The reason is in the table below.
Latency Effort Consumer Tech Supplier Cost Store Low High Low High Mail High Low Medium Medium Download Low Low High Low
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