Why Saving Blockbuster is a BAD Idea

13 04 2010

Thanks to John Gallaugher’s excellent “The Week in Geek“, I found this article on TechCrunch covering Fox and Sony’s recent agreement with Blockbuster.  So Blockbuster will now have access to Fox and Sony movies immediately on DVD launch day, and Netflix still won’t have access until 28 days later.  This comes after the recent deal Warner Pictures made with Blockbuster to do essentially the same thing.

Why would they see this as a good idea?  Trying to prop up a failing business in Blockbuster (how they cut $200 million in operating costs is beyond me, but clearly they had some bloated practices going on) while taking a shot at a clearly winning model like Netflix just isn’t smart.  This reminds me of the music labels who were holding out on Apple.  The game has clearly changed, and consumers have made the decision with their wallets to go with Netflix.  The movie studios need to jump on or it’s going to be a bumpy ride.

As Chris Anderson has noted many times, the larger percentage of the sales is in the Long Tail, which is where Netflix is and Blockbuster can never be (see Chris’s TED talk below).  The market size of people who care that much to see a DVD in it’s first 28 days (and not wait for the Netflix release) isn’t large enough to sustain a brick-and-mortar business anymore, and I think these last attempts to save Blockbuster will look like a bad move in the long run.

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