Can you get dizzy from too much spin?
Blockbuster
Let me know if you agree.
Blockbuster commissioned a survey through e-Rewards, in an attempt to get a read on how consumers will budget their entertainment spending during these tricky economic times.
The findings are predictable.
- 88% of the survey participants plan to stay home more in an economic downturn.
- 87% will try to use their home entertainment centers more.
- 76% agree that watching movies is a good mental escape from life's financial hardships.
- 79% see renting movies as a good value.
If we were back in 1988, this survey could have been interpreted as a major win for Blockbuster. Unfortunately for Blockbuster, it is competing in 2008, where cheaper and more convenient alternatives to trekking out to the video rental store are readily available.
Home alone
The desire to stay home is mandated, in part, by pesky oil prices. How is that good for Blockbuster exactly? Assuming that you're living in a major metropolitan city where the nearest multiplex is as close as your local Blockbuster store, isn't a round trip to the theater easier on your tank than making a pair of round trips to rent and return your flick?
Before you suggest that Blockbuster is pointing to the success of its Total Access mail-order product, you may want to see where that headcount has been going. Subscribers peaked at 3.6 million two quarters ago. That number fell to 3.1 million members during the final quarter of 2007, where it also stalled during this year's first quarter.
Total Access is "positioned for growth," CEO James Keyes argued during last month's conference call. That isn't growing. That is justifying stagnancy. The service is finally profitable, and that's a great thing, but why can't it walk and chew at the same time like Netflix
Even if the survey is somehow twisted into justifying real-world rentals, it is probably better news for a company like RedBox -- bankrolled in part by Coinstar
The incredible sulk
A DVD rental isn't the experience equivalent of going out to the movies. It's actually better in a few ways, since you don't have to deal with rigid start times, sticky floors, noisy patrons, or a projectionist who won't hit the pause button for a quick bathroom run. However, it's also inferior in that you are watching a flick that millions saw several months ago -- and you’re doing it on a smaller screen.
Renting a movie through Blockbuster as a value proposition can only be compared to buying the actual disc, or taking advantage of the growing options for the delivery of celluloid into your living room. If you're Blockbuster, you don't want to be breaking out the fist-pumps just yet.
Competing against actual purchases isn't a slam-dunk for Blockbuster in this era of $4 gallons of gasoline, and climbing. Amazon.com
Would you rather get in your car four times to complete a ticking rental transaction, or pay a little more for a pristine copy of the film that you can keep forever?
Cheaper by the dozen
Even if consumers opt to pay less for limited-time rentals, technology is not Blockbuster's friend. Cable providers don't have to worry about inventory management or talking you into a rental-store trek in winning you over to the growing pay-per-view alternatives. You also have digital delivery being championed by Netflix, Amazon, and Apple
Digital delivery is important, because it turns the one argument that Blockbuster had against Netflix -- the ability to achieve near-instant gratification instead of waiting for a postal delivery -- into a knock.
If you own a TiVo
I'm actually a fan of Blockbuster. I believe the company's merchandising efforts are on track. I am even one of the few analysts out there who agree with the logic of going after a consumer electronics retailer like Circuit City
I can see why Blockbuster commissioned the survey. However, when the results point to your own obsolescence, the key benefit of having sponsored the survey is that you could have buried the results.
