Blockbuster files for bankruptcy

[Rcourt64]

The nation's largest movie-rental chain has been losing money and customers for years. » Victim of changing habits

[Toby]

They waited way too long to get into the online and via mail markets. Netflix already had too large a market share by then.

[RawAlex]

Toby, if it was only video stores and netflix, blockbuster would survive just fine. There is plenty of market there. However, the reality is that piracy killed the market down enough to where the 30% of the pie that blockbuster would get is no longer enough to sustain their business (1 billion in debt). Yes, Netflix took a lot of market share from them, but piracy shrank the size of the market.

[softball]

Originally Posted by RawAlex

Toby, if it was only video stores and netflix, blockbuster would survive just fine. There is plenty of market there. However, the reality is that piracy killed the market down enough to where the 30% of the pie that blockbuster would get is no longer enough to sustain their business (1 billion in debt). Yes, Netflix took a lot of market share from them, but piracy shrank the size of the market.

"The Hurt Locker" being a good example of this.

[EmporerEJ]

Originally Posted by RawAlex

Toby, if it was only video stores and netflix, blockbuster would survive just fine. There is plenty of market there. However, the reality is that piracy killed the market down enough to where the 30% of the pie that blockbuster would get is no longer enough to sustain their business (1 billion in debt). Yes, Netflix took a lot of market share from them, but piracy shrank the size of the market.

No, they really wouldn't, and piracy had nothing to do with Blockbuster's failure.
Since I was in the video business before, and now after, what will be blockbuster, I know something about this.
I was in the "video store" business from 1985-1994 with 4 retail stores in central PA. These were multi-thousand title stores, (Allot for then) with a "back room." But by no means were they confused with adult stores. Blockbuster rose to prominence about the time I got out of the daily retail biz of video. (Got tired of standing behind the counter for the most part.)
At that time, there was no "DVD," it was all VHS. Blockbuster survived on a variation of the "rentrack Scheme," first introduced by National video in the late 80's. This was an unholy rev share program with the studios, much like the theater business. This had a HUGE advantage with VHS, but not so much with DVD.

(Price comparisons: VHS Wholesale=$67, DVD =$16)
Blockbuster slowly inced the rental prices up from $2.49/day (What we got) to $5 for DVD, while massively lowering the wholesale cost by a factor of 5. They should have raked in the cash, and they did, for several years.
Netflix was a natural progression, as was redbox. Those two items are what killed blockbuster, and what has created a new short term (5-8 year?) money making possibility. The Kiosk. (WITH all varieties)

Yes, I own 2.

Piracy is now, and always has been, irrelevant in the numbers. It just doesn't show up in the stats.
And those numbers they project? All bullshit. all those sidewalk vendors are a drop in the bucket to the real sales numbers.

When you consider that Walmart is the single, largest, vendor of DVDs in the USA, you'll quickly see why the studios are willing to change their DVD releases to satisfy bentonville.

[MikeSouth]

EMP thats a good explanation...I credited you and oprano and used it on mikesouth.com

if for some reason thats not ok lemme know and I will yank it

[EmporerEJ]

Originally Posted by MikeSouth

EMP thats a good explanation...I credited you and oprano and used it on mikesouth.com

if for some reason thats not ok lemme know and I will yank it

Feel free, and thanks.

[RawAlex]

one thing though... I mentioned to a friend of mine today (asian) that Blockbuster in the US filed for bankruptcy, and her comment was "who rents... don't you just download whatever you want?".

There is a whole generation (younger than most of us here) for whom actually paying for content (movies, music, whatever) isn't even a consideration. Either they go with friends and pay the big bucks to see the movie in the theater, or they download it off the torrent sites or the private trackers they are part of.

Rentals don't exist for them, except perhaps in the rare case they need to rip something to put online for credit. Otherwise, it's null.

You run a couple of kiosks, so you should know. How old is your average renter? I am guessing closer to 40 than 20. 10 years from now, that number will be closer to 50, unless something dramatic changes.

Blockbuster got squeezed by plenty of things, and I think it significant that the market that should be most likely to rent (people with less money to buy, aka students and younger people) wouldn't set foot in a rental store in 100 years, except maybe to get a job.

I also think they made plenty of mistakes on real estate, store sizes, and the like. Too many square feet for a very simple product.

[Hell Puppy]

this is a good case study for "adapt or die".

[MikeSouth]

porn is a good case study for adapt or die

heres the porn model

producer uses his own money to create his video, duplicate it etc

he then gives it to a manufacturer for 70% of the gross sales to the distributor

the manufacteror sells it to a distributer

the distributer sells it to the retailer

the retailer sells it to the customer at a price around 20 - 30 bucks

How could this model NOT fail? And who really gets the shaft...the producer because the manufacturer has no real incentive to collect on the producers behalf so distributors will go 180 or more days past due. I had Metro Home Video go 270+ days past due on an 8K invoice....then they bounced 3 three checks. took me a year to get paid by the manufacturer

[EmporerEJ]

Originally Posted by RawAlex

one thing though... I mentioned to a friend of mine today (asian) that Blockbuster in the US filed for bankruptcy, and her comment was "who rents... don't you just download whatever you want?".

There is a whole generation (younger than most of us here) for whom actually paying for content (movies, music, whatever) isn't even a consideration. Either they go with friends and pay the big bucks to see the movie in the theater, or they download it off the torrent sites or the private trackers they are part of.

Rentals don't exist for them, except perhaps in the rare case they need to rip something to put online for credit. Otherwise, it's null.

You run a couple of kiosks, so you should know. How old is your average renter? I am guessing closer to 40 than 20. 10 years from now, that number will be closer to 50, unless something dramatic changes.

Blockbuster got squeezed by plenty of things, and I think it significant that the market that should be most likely to rent (people with less money to buy, aka students and younger people) wouldn't set foot in a rental store in 100 years, except maybe to get a job.

I also think they made plenty of mistakes on real estate, store sizes, and the like. Too many square feet for a very simple product.

Hence my estimate of 5-8 years more. And I'm probably making a mistake on the low side there. I said the same thing back in '94, and then DVD came along. Had I stayed in the biz, I could have adapted to DVD, and made a cash crop fro a while. (But I really was bored of retail.)

Couple reasons Netflix, and the "cable company et all" of "instant download" won't win for some time to come.

Netflix will never win, because there is a delay. Even though it's one day for most, people want it NOW. They are trying to adapt, but licensing will always stop them. In the US, the laws, regulations, and licensing have done more to hold back technological advancement than anything else.

Cable company, and all "instant" delivery services have serious flaws.
Cable company shoots themselves in the foot all the time.
Try renting a move from them sometime.
You Pay at least $4, PLUS a "fee" to use that damn box you are already paying a monthly rental on. Usually 25-50 cents.
You think that doesn't piss off the average American?
They haven't been able to get that model working properly since the 80's.

They all, ultimately lose,because the law doesn't allow the transfer of porn over the cable system, and the netflixes of the world will never deal in it.

And THAT is the real secret of ANY video biz. The "safe" distribution of porn. That was the lesson I learned, standing behind 4 counters, for 9 years.
Give them a way to safely, and quietly rent porn, and they will beat a path to your door.

I now share the secret to success, which I learned over a lifetime of trial and error.
And why do I share it freely? Anyone with half a brain can figure it out, and I can't get it all.....

[sunfunbill]

There is a whole generation (younger than most of us here) for whom actually paying for content (movies, music, whatever) isn't even a consideration. Either they go with friends and pay the big bucks to see the movie in the theater, or they download it off the torrent sites or the private trackers they are part of.

Rentals don't exist for them, except perhaps in the rare case they need to rip something to put online for credit. Otherwise, it's null.

You run a couple of kiosks, so you should know. How old is your average renter? I am guessing closer to 40 than 20. 10 years from now, that number will be closer to 50, unless something dramatic changes.

A little off topic from the OP, but this is why you should cater to niches in adult biz. Very highly specific fetishes and niches are normally populated by older men.

Older men have more money and more likely to just pay for what they want then college kids. My niche is mostly middle aged men. They don't want to dick around with torrents and crap, they just want to pay for a quality site that has their fetish.

[Toby]

Originally Posted by sunfunbill

My niche is mostly middle aged men. They don't want to dick around with torrents and crap, they just want to pay for a quality site that has their fetish.

+1

[gonzo]

Originally Posted by sunfunbill

A little off topic from the OP, but this is why you should cater to niches in adult biz. Very highly specific fetishes and niches are normally populated by older men.

Older men have more money and more likely to just pay for what they want then college kids. My niche is mostly middle aged men. They don't want to dick around with torrents and crap, they just want to pay for a quality site that has their fetish.

+2

[EmporerEJ]

Just another thought here.....

But the "asian young generation" is not a factor in the money calculation at any level. They never did pay, probably don't have a mechanism to pay, and likely don't earn enough to pay for the content. So why waste your time worrying about them.

[EmporerEJ]

Originally Posted by RawAlex

You run a couple of kiosks, so you should know. How old is your average renter? I am guessing closer to 40 than 20. 10 years from now, that number will be closer to 50, unless something dramatic changes.

The Kiosk only recognizes over 18 (Have credit card.)
But, even if it were so, how does that matter?
Will that 50 year old, who is now very comfortable renting the DVDs this way, and is very happy the DVD player doesn't have a flashing "12:00 am," suddenly stop watching movies? No. In fact, they will be even better customers then, as now.

[RawAlex]

Originally Posted by EmporerEJ

The Kiosk only recognizes over 18 (Have credit card.)
But, even if it were so, how does that matter?
Will that 50 year old, who is now very comfortable renting the DVDs this way, and is very happy the DVD player doesn't have a flashing "12:00 am," suddenly stop watching movies? No. In fact, they will be even better customers then, as now.

Yup, and you keep selling to a declining market (because, sadly, people over 50 do tend to die off... or retire and leave the area). If you don't see a lot of people under 30 using the machines, that should tell you that it isn't a business with a true long term potential for growth, just a nice slow and steady decline into irrelevance.

[EmporerEJ]

Originally Posted by RawAlex

Yup, and you keep selling to a declining market (because, sadly, people over 50 do tend to die off... or retire and leave the area). If you don't see a lot of people under 30 using the machines, that should tell you that it isn't a business with a true long term potential for growth, just a nice slow and steady decline into irrelevance.

I just love guys like you.
I have no illusions the DVD KIOSK market will be around til I die.
It doesn't have to be, to make me happy. I'd be happy for 5 solid years. The numbers are THAT good.
The upfront is low, the ongoing is ridiculously low, compared to when I was in the Bricks and mortar video, and it's just another revenue stream, that uses about an hour's worth of time a week for me. (From my chair...wherever that chair may be.)

It's also one of those works by itself while I'm sleeping, or elsewhere kind of things.

But you know what.... you're right again. Bad idea.........for you.
You go do something mo' betta.

I know one sure way of not getting anything at all......spend your time convincing yourself why a thing doesn't work, or won't work in the foggy future, or some other "no facts," baseless decision.
That way, you can certainly ALWAYS be right.

Love the armchair entrepreneur.

[RawAlex]

Originally Posted by EmporerEJ

I just love guys like you.
I have no illusions the DVD KIOSK market will be around til I die.
It doesn't have to be, to make me happy. I'd be happy for 5 solid years. The numbers are THAT good.
The upfront is low, the ongoing is ridiculously low, compared to when I was in the Bricks and mortar video, and it's just another revenue stream, that uses about an hour's worth of time a week for me. (From my chair...wherever that chair may be.)

It's also one of those works by itself while I'm sleeping, or elsewhere kind of things.

But you know what.... you're right again. Bad idea.........for you.
You go do something mo' betta.

I know one sure way of not getting anything at all......spend your time convincing yourself why a thing doesn't work, or won't work in the foggy future, or some other "no facts," baseless decision.
That way, you can certainly ALWAYS be right.

Love the armchair entrepreneur.

This is why you always end up in arguments and disagreements, because you jump right over and suggest I am saying it's a bad business and don't do it. I AM NOT.

Wake up. All I am saying is that Kiosk style rental things are in the same exact place that blockbuster was back in the day, where margins were great and it looked like a business with a long potential life span. The sad reality is that it was not a long term business, certainly not as long as they were planning for.

Your customer base is older, and currently less likely to go online. But as more and more TVs and DVD players have netflix installed, and as more people become comfortable with pirating movies and such (and more do all the time), the more your business gets eroded, exactly in the same manner it did for Blockbuster.

Will you get 5 years? 10? 2? I don't know. All I am certain of is that if I had asked people if the DVD was going to be a near dinosaur today, most of them would not have believed it. Advancements are moving even faster, rendering the trip to the video store (even a kiosk) as a quaint thing that your parents use to do, before they learned better.

remember, talk with us, not down to us. It works better!

[EmporerEJ]

Originally Posted by RawAlex

remember, talk with us, not down to us. It works better!

Well, I'm not trying to do that......even if I could.

But your constant negativity is "harshing my mellow."

[RawAlex]

Originally Posted by EmporerEJ

Well, I'm not trying to do that......even if I could.

But your constant negativity is "harshing my mellow."

you need better (insert drug of choice) here if I can harsh your mellow.

Then again, I guess you are right about all of this, because you always are.

[boobbucks]

Originally Posted by Rcourt64

The nation's largest movie-rental chain has been losing money and customers for years. » Victim of changing habits

The media biz is changing almost as fast as the adult biz. Thanks to Netflix and free downloads Blockbuster found its business model out of date. Next to fall, Comcast.

[Rcourt64]

Originally Posted by boobbucks

The media biz is changing almost as fast as the adult biz. Thanks to Netflix and free downloads Blockbuster found its business model out of date. Next to fall, Comcast.

Comcast? How'd they fall into the picture?

[softball]

Originally Posted by EmporerEJ

Well, I'm not trying to do that......even if I could.

But your constant negativity is "harshing my mellow."

Dude, your mallow was marshed years ago. But then again, you are arguing with someone who can't seem to make enough to get out of the mosquito capital of the planet. That prolly speaks volumes in itself.

[Rcourt64]

Originally Posted by rhetorical

Dude, your mallow was marshed years ago. But then again, you are arguing with someone who can't seem to make enough to get out of the mosquito capital of the planet. That prolly speaks volumes in itself.

Ohh gawd ..I wish you'd talk to me like that, Mmm.. You dirty whore you.

FAP FAP FAP FAP FAP FAP FAP FAP FAP FAP FAP FAP FAP ....

[TheEnforcer]

Yeah.. not sure where Comcast comes into play on this....

[MikeSouth]

I get the comcast connection..its a business model thats in trouble, at least on the TV side.

[Rcourt64]

Originally Posted by MikeSouth

I get the comcast connection..its a business model thats in trouble, at least on the TV side.

Might you be expressing that the Internet is now also affecting TV Networks and its broadcasting affiliates?

Hmmm...
I could have swore I mentioned something similar to this a few years back on here saying to the FFN's "to think outside the box." but got laughed at instead. ...

[EmporerEJ]

Originally Posted by RawAlex

you need better (insert drug of choice) here if I can harsh your mellow.

Then again, I guess you are right about all of this, because you always are.

Well, I am right.....
But I could use a new drug. (Insert Huey Lewis melody here.)

[EmporerEJ]

Originally Posted by rhetorical

Dude, your mallow was marshed years ago. But then again, you are arguing with someone who can't seem to make enough to get out of the mosquito capital of the planet. That prolly speaks volumes in itself.

My "mellow" not my "mallo."

Harshing my "Mellow."

Careful you'll sprain something.

[EmporerEJ]

Originally Posted by MikeSouth

I get the comcast connection..its a business model thats in trouble, at least on the TV side.

No, they'll be fine.
They have franchise contracts with small town USA. In most cases, negotiating with people that have NO CLUE.

And they own broadband in much of America. That's where the gravy is, that Dish can never touch.

I HATE comcast.

[MikeSouth]

Originally Posted by Rcourt64

Might you be expressing that the Internet is now also affecting TV Networks and its broadcasting affiliates?

Hmmm...
I could have swore I mentioned something similar to this a few years back on here saying to the FFN's "to think outside the box." but got laughed at instead. ...

You didnt get laughed at by me bro....anyone who hasn't seen this coming is blind. Why doyou think Comcast bought NBC?

[RawAlex]

Actually, it isn't really thinking outside the box, it's thinking about what the next box will be. Comcast clearly has a vision of the next box, and wants to get involved.

Cable companies are the Google of their era, smart companies that got in the middle of something that they neither created or used. But in modern times, there are plenty of ways to get programming, and cable isn't gaining in the market. So they are working to define the next box, and to push you all into it.

Middlemen isn't just the name of a movie that appears to have taken e-pass down. It's also a very profitable business model.

[amapornfreak]

Wow really, that sucks, well I guess netflix is gonna win it really.

[EmporerEJ]

Originally Posted by RawAlex

Middlemen isn't just the name of a movie that appears to have taken e-pass down. It's also a very profitable business model.

It ought to be the name of the MC/Visa franchise.
That's all they are.