Blockbuster Making Inroads On Digital Delivery

More news on the download front:

Reuters: Blockbuster takes on Netflix with new set-top box

LOS ANGELES (Reuters) - Blockbuster Inc on Monday said it would roll out a new digital media player that brings fewer, but more recent titles from the Internet to consumers' televisions than a six-month old offering from rival Netflix Inc.
The MediaPoint player by broadband device maker 2Wire allows Blockbuster customers to download high-definition quality movies to their TVs via broadband lines for $1.99 apiece, after an initial $99 for the box and 25 films.
Consumers have 30 days to watch a film once it is downloaded to the set-top box, and must finish watching it within 24 hours of pushing the "play" button.
The service, called Blockbuster OnDemand, can be ordered at www.blockbuster.com beginning on Tuesday.

I know what you custom installers are sarcastically thinking: "Hooray, another fucking box to integrate!"

Well, it's a start, at least.

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Blockbuster Video: We Have A Set-Top Box Too!

Electronista: Blockbuster to deliver set-top for holidays

Confirming earlier rumors, Blockbuster has announced plans to build a set-top box that will stream digitalmovies to TVs. The company's CEO, Jim Keyes, further notes that the the device will be associated with its Movielink rentaland purchase service, but has not provided details on costs, capabilities or hardware specifications. A release is expected sometime during the holiday season; also in development is support for Blockbuster streaming through Intel chips inside IPTV hardware.

While on the one hand, I want to roll my eyes and proclaim this to be JGAFB,* I will say that when it comes to bringing digital delivery to fruition, the more the merrier. Choice is good for consumers, and competition will speed up the adoption of higher-tech solutions.

*Just Great, Another Fucking Box.

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Breaking News: Blockbuster Loses Less Money

Given the general economic climate, not to mention the collision course with obsolescence that video rental stores are on, this is cause for much rejoicing at Blockbuster HQ.

TWICE: Blockbuster Reports Lower Q3 Net Loss

Blockbuster reported lower sales and a reduced net loss for its third quarter, ended Oct. 5.
Total revenues for the third quarter decreased 2.7 percent, or $33.6 million, to $1.20 billion, as compared with $1.24 billion in the third quarter of last year.
Net loss for the quarter narrowed 48.3 percent to $17.8 million, as compared with a net loss of $34.4 million the third quarter of last year.

Sometimes you just have to be happy with what you've got.

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Blockbuster Abandons Circuit City Deal

So much for the entertainment fodder that the notion of beleaguered video rental retailer Blockbuster saving beleaguered CE retailer Circuit City provided all of us.

Bloomberg: Blockbuster Abandons Circuit City Bid After Review

-- Blockbuster Inc., the world's largest movie-rental chain, walked away from an offer of as much as $1.35 billion for money-losing electronics retailer Circuit City Stores Inc. after taking a closer look at its finances.
``Based on market conditions and the completion of our initial due diligence process, we have determined that it is not in the best interest of Blockbuster's shareholders to proceed with an acquisition of Circuit City,'' Jim Keyes, Blockbuster chairman and chief executive officer, said today in a statement.

Translation: "Circuit City needs a major overhaul from someone with deep pockets and a keen vision to become a competitive retailer, and that someone is definitely not us. Hell, we can barely look after ourselves!"

To be a little less sarcastic, perhaps their strategic advisers persuaded them that even if they could secure the financing (which, frankly, I doubt they could) the whole notion of tying two turkeys together to create an eagle, while a colorful metaphor, wasn't really all that good of an idea.

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Fire Sale For Circuit City & Blockbuster?

Both CC and Blockbuster are bouncing around absolute all-time lows. If a really masochistic, suicidal Private Equity company felt that they had the cash to burn, they could take majority positions in both companies for less than a $100 million.

At the moment, the light at the end of the tunnel is the vague hope that neither Carl Icahn nor Mark Wattles is yet prepared to give up on their investments, and still want to see a deal get done that nets them a payday. Certainly, at the moment, market sentiment doesn't seem to favor that hypothesis.

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Wallstrip Brings Out The Knives For Blockbuster/Circuit City

Julie from Wallstrip does a great job of reiterating what myself and many other watchers have had to say about the putative Blockbuster/Circuit City merger.





Hat tip to Dealbreaker for posting this video before me.

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Blockbuster's Download Kiosks Need Some Fine-Tuning

My good friend Jason Unger beat me to the punch on this one, so read his dissection of Blockbuster's initial download kiosk concept:

Blockbuster’s Download Kiosks: Follow the Redbox Model

According to Keyes, movies would cost $3.99 (though a subscription model could come) and could only be downloaded to Archos players.
Could this work? Yes and no.
Who actually owns an Archos player? A lot fewer people than those who own iPods. It would have to be device independent.
It's redundant to place these kiosks in Blockbuster stores. Why would you go to the movie store to download a movie? Put the kiosks in supermarkets and fast-food restaurants, like DVD-rental kioskRedbox does.
...
For Blockbuster's video download kiosks to work, they have to be available in places where people actually go. News flash: that's not the video store anymore.

Really, the only things I have to add are to reiterate Jason's disbelief in Blockbuster's choice of partnering with Archos. Limiting your target market to Archos player owners is like limiting your target market to left-handed cross-dressing professional limbo dancers: you're not exactly setting yourself up for oodles of sales.

Secondly, why download to players at all? Why not download to flash drives? Multi-gig flash drives are springing up like mushrooms, getting bigger and cheaper. Why not take this route? It would certainly address a lot of interoperability issues with different handheld media devices.

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Now Blockbuster/Circuit City Merger Arbs Swinging The Other Way

I have been wrong before, you know (don't act all surprised). Earlier this week both here and on CE Pro I insinuated that the spread between both Circuit City and Blockbuster's share prices indicated that investors lacked faith that a deal was forthcoming.

Today the spread inverted, with CC gaining ground and BBI declining. Is something in the offing, or is it just wishful thinking anticipation by investors that a slow day in the market will be made more exciting by an announcement after the bell?

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Blockbuster, Netflix Get Cracking On Digital Delivery

All kinds of interesting developments in the Digital Delivery space lately.

For a start, Blockbuster Video is gearing up downloadable video from it's website, as well as further developing the download kiosk concept.

InternetRetailer.com: Blockbuster lifts the curtain on its digital entertainment plan

Blockbuster in June will also roll out a new digital download service on Blockbuster.com using technology from its acquisition of Movielink LLC in August. “Our acquisition of Movielink provided both digital content and a distribution tool,” Keyes told analysts. “We have a new online service in beta testing now and we are planning to make it available to all customers in June. The extensive library of over 9,000 titles gives us one of the largest digital video on demand and day-date electronic sell-through libraries in the marketplace.”

At the same time, their bitter rival NetFlix has rolled up their Roku dowload box.

Crave: Look out, Apple TV: The $100 Netflix Player has arrived

With the release of the Netflix Player, subscribers need only have a wired or wireless broadband connection to access the entire Instant Viewing catalog through their TV. The full review--with hands-on video--is available at CNET Reviews. But for those who prefer to cut right to the chase, here's the short and sweet version:
We've been playing with the Netflix Player for about two weeks, and--for the most part--we found a lot to like. Setup is simple, and--if you've got a solid broadband connection--picture quality is acceptable and streaming performance was almost entirely lag-free

Baby steps, perhaps, but a good start! On a related note, I'm hearing whispers from the telecom industry that progress is being made on bridging the so-called "last mile" in residential broadband. More on that later.

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Is The Party Over For A Blockbuster/Circuit City Deal?

At the same time that Circuit City's share price has dramatically tanked, Blockbuster's has risen dramatically.

For those of you who don't follow these things, typically with merger announcements and rumours thereof, the target stock rises towards the putative buyout price, while the purchaser’s stock declines, in anticipation of the short-term impact of debt and suchlike on fiscal performance. This is precisely what happened when Blockbuster first announced their intentions. Now the opposite is occurring, which leads me to wonder if institutional investors either think or know that Blockbuster’s going to walk away.

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Is There Going To Be A Circuit City Deal, Or Not?

Interested observers will have noticed that Circuit City's share price has been slowly ebbing away from last Friday's spike when financier Carl Icahn announced interest in taking them private, with or without Blockbuster Video.

The (presently) 6% slide since last week may be a sign that large, well connected investors are doubting that after examining Circuit City's books, either Icahn or Blockbuster (or both) will advance an offer. It seems unlikely at this point, especially given Blockbuster's earlier ardor towards making a deal, but stranger things have happened.

**The content contained in this blog represents the opinions of Mr. Distad. This commentary may contain forward looking statements and definetely contains sarcasm and rude sentiments. This commentary in no way constitutes a solicitation of business or investment advice. If you're looking for stock picks from me, look somewhere else. Really, what were you thinking? If you came here because you were trolling Google looking for someone to help you get rich in only twenty minutes a month, you need to seriously re-evaluate your worldview. This blog is intended solely for the entertainment of the reader, and the author, and not neccessarily in that order.

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Carl Icahn Serious About Circuit City

Things appear to be coming to a head in the struggle for ownership of beleaguered retailer Circuit City. Now financier Carl Icahn, himself a director of Blockbuster has said that he would be willing to consider paying Circuit City out of his own pocket if it is not feasible for Blockbuster to do so.

TWICE: Carl Icahn May Buy Circuit City

Circuit City had previously resisted Blockbuster’s $1 billion-plus buyout offer, citing its questionable financing. But in a statement released this morning, the CE chain said it had received a letter from Icahn, the billionaire investor and Blockbuster director, indicating that he would be willing to buy Circuit City if the video rental chain is unable to.

Given how the previously volatile CC had risen and plunged like a roller coaster since before Christmas, the last couple weeks of relative calm had signaled that perhaps something was in the works.

Will a deal go through, with or without Blockbuster? Watch this space.

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I'm Far From The Only Person Mocking Blockbuster's Bid For Circuit City

Exhibit A: This otherwise straight-faced, but slyly cruel coverage from TWICE.

TWICE: Blockbuster/Circuit Gets Mixed Reviews

Some industry observers contacted by TWICE were also unsure of the deal’s merits. “Absent the short-term accretive benefits, it’s a questionable marriage,” observed Dave Workman, executive director of the Progressive Retailers Organization (PRO) Group buying organization and former CEO of Wattles’ Ultimate Electronics chain. “I’m not really sure where the benefit comes from. On the surface, it doesn’t appear to be a match that brings a lot of strategic value to either company.”

Exhibit B: Bill Maher saying what everybody was thinking.





Hat Tip to CE Pro for the initial link to the video

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Partnerships & Mergers In CE: More To Come?

Christine at Marketnews has some perspective on the rash of mergers, proposed mergers, and strategic alliances that have cropped up lately among CE manufacturers and retailers.

MarketnewsGadgetTalk: Have Partnerships & Acquisitions Become a Necessary Evil in CE?

In some cases, partnerships are indeed made to strengthen a company/brand by utilizing resources that the other can provide. In others, it's to "take out" the competition. But it appears that, as of late, we're seeing more and more traditionally considered "competitors" looking at one another and saying "I need you and you need me. We can't do this alone."

The impetus for her post is the looming dogfight over who's bidding for a 49% stake in D&M Holdings:

Dealerscope: Kenwood is Latest to Enter D&M Bidding

Another day, another new bidder for D&M Holdings. The Stratecon Group reported
Tuesday, citing Japanese news service Nikkei, that Kenwood has teamed up with Bain Capital to make a bid for D&M, a 49 percent stake of which is being auctioned off by RHJ International.
Stratecon added that final bidding is expected to take place in mid-May, and that the four “finalists” are Best Buy, the Bain/Kenwood group, Merrill Lynch, and Advantage Partners LLP.

Bear in mind that mergers and alliances don't always reap positive results. As one of my regular inside sources told me in an email today when I asked him how he expected it to shake out:

Depends on who gets it and how much they borrowed to pay for it. Do they expect a return this quarter or next? 2 quarters is long term planning for many of the suitors named. One thing is for sure, Boston Acoustics sure didn't gain any strength after the D&M takeover.

Just because everyone's rushing to make a deal doesn't mean that they'll be a winner even by time the honeymoon's over. Most analysts and industry watchers are certain that there's no way Blockbuster will scrape together enough loot to buy out Circuit City. And Best Buy's foray into Venture Capital and Private Equity has been called a sign of the apocalypse Market Top.

That said, I expect we'll see many more high profile pairings announced this year, even if they're totally goofy.

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Blockuster Makes A Play For Circuit City: Nobody Saw THAT Coming!

I've declared for about a year now that beleagured CE retailer Circuit City is a prime takeover play. However, I never expected beleagured video rental retailer Blockbuster to make a bid!

Yahoo!: Blockbuster offers up to $1.3 bln for Circuit City

Blockbuster Inc said on Monday that it was offering up to $1.3 billion for electronics retailer Circuit City Stores Inc , a bid that left some analysts scratching their heads.
While Blockbuster touted the proposed combination for its synergies, investors were skeptical about its value, and shares of the video rental chain fell nearly 11 percent.

This is far from over. For a start, this is a classic example of tying two pigeons together to make an eagle, and calling it "synergy."

For another thing, the first thought that popped in my head this morning was "How is Blockbuster going to finance this?" Unless BBI's board just found a billion dollars in their sofa cushions just now, it seems like a bit of a stretch, which is an opinion shared by Circuit City's board:

TWICE: Circuit City Questions Funding For Blockbuster Bid

Circuit City is doubtful that Blockbuster can swing the $1 billion it has offered to buy the struggling CE chain, and is unwilling to provide further due diligence information until the funding issue and other “fundamental questions” are answered

Will this go forward? Will this light a fire under Mark Wattles' ass to up the ante on his own takeover plans? Watch this space.

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Can Blockbuster Be A Winner At The Download Biz?

This sat on my desktop for over a day now, just because I couldn't decide how I wanted to spin it: straight or snarky, sympathetic or mean. I'm still not sure, so let's just get right into it and see how it turns out.

InternetRetailer.com: Blockbuster turns to the web for new growth

As Blockbuster Inc. continues to slug it out with rival Netflix Inc., it’s staking its claims to differentiation and its future on a bid to be a multi-channel retailer and not just a DVD rental company. And in repositioning to a multi-platform strategy, the Internet and e-commerce figure to play a big role.

To give Blockbuster credit, they seem to have done a comprehensive job of taking a look at what's going on in entertainment media, and planning to imitate it. As one sage buisness guy once told me, "you don't need a better mousetrap, you just need a good one."

You don't even have to be the first one on the market, or even groundbreaking and innovative, you just have to show up and do your best. Brand recognition and customer comfort levels might even be a factor.

The strategies outlined in the article linked above seem to hit all the right buzzwords: online and kiosk downloads, and online partnerships. The big question is can they fire on all cylinders?

On the one hand, it's been a long, long time since Blockbuster has been on top of the heap. On the other hand, I love a good underdog story, and to be fair, they mean well, and they're trying really hard to change.

I was talking with an industry contact about downloads yesterday, and his two picks for the future movers was iTunes and Netflix. Is there room for Blockbuster on that list?

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Media Displays Irrational Exuberance Over Blockbuster's Big Day

If you only read the headlines, you'd think that Blockbuster Video had the best day ever yesterday.

The Evening Bridge: Blockbuster Profits Surge Amidst Restructuring

CNN: Don't count Blockbuster out

MSN Money: Blockbuster finish for movie-rental co.

Let's get real for a minute here: BBI opened at $3.25, and popped to $3.32 before slumping to close at $2.73 which, let's not forget, is near the company's 52-week low. Bully for them for having a great earnings number (relative to their recent history) but it seems premature to break out the champagne just yet.

They shouldn't kid themselves, it's great that they're getting their operational ducks in a rock, but they still have a long row to hoe before they can be considered a winner company again.

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Bearish on Blockbuster

Cnet's Don Resinger doesn't hold back in his vivisection of Blockbuster Video's chances in the online marketplace in his morning rant:

Cnet: Say goodbye to Blockbuster

Much like the print media and retail stores refusing to change, Blockbuster has been a victim on an online company finding new and inventive ways of bringing a product to a customer. And due to its size and outdated corporate culture, there really is no salvation for Blockbuster at this point. Try as it might, the future of Blockbuster is bleak, at best.
Sure, the company still enjoys revenue that climb into the billions of dollars, but with an ever-increasing net loss and a public refusal to focus on Total Access--the area where Netflix continues to dominate--what is the impetus for us to jump on the Blockbuster bandwagon?
Simply put, Blockbuster is doomed. And while many of us have known it for a while now, it's amazing to me that the chairman of the company admitted this in a not-so subtle way, as well.

Mr. Resinger does such a great hatchet job on the company, I don't know what else to add, except to encourage you to read the whole thing.

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