now that Blockbuster got dropped by Viacom they aren't going to be producing profit anytime soon :p






"Blockbuster has had to fight speculation from many different directions over the past few years that has called into question the very viability of its business model. Do consumers still enjoy going out and browsing through titles to pick out a movie, or do they prefer receiving them in the mail thereby saving them the trouble of driving to a local store? Or better yet, would they rather pick up the remote, press a couple of buttons and enjoy the latest new release? Blockbuster, Netflix and cable companies offering PPV (pay per view) would have very different answers to this question.




Of course, it does not help that the core product itself, the film industry, is underperforming, which has been the case during the current 19-week Hollywood box office slump. Blockbuster does not expect a turnaround until the fourth quarter, which is why it backed off from its previous profit guidance.

Blockbuster’s volte face in strategy is disturbing. In early 2005, it launched its “no late fee” program with much fanfare, reduced the rates for its online subscription package to $14.99 from $17.99 in order to compete with Netflix - the pioneer in online rentals. This was all done to widen its subscriber base, but the company’s recent announcements indicate that it is not willing to stay the course. Blockbuster announced that the rates for all of its online subscription packages were going to be increased along with hikes in prices for in store rental programs. Since its service is now more expensive, Blockbuster is going to have to do more than just give away DVD players (as it did in the past for ex- Wal-Mart/ Netflix customers) to lure business from Netflix especially since its subscriber base is one third of the latter’s.


These decisions reflect the acrimonious environment in Blockbuster’s boardroom as two individuals with very different visions for the company jostle for supremacy. Chairman and Chief Executive John Antioco wants to expand the business beyond the traditional movie rental model by offering video game subscriptions, buyback services and online rental programs. The problem is that the company’s single largest investor, Carl Icahn, views the business as more of a “cash cow” in a mature and stagnating sector which should be milked for revenues instead of being provided with further nutrition. "