Ep 39 of 2010
September 27, 2010
In what can only be described as inevitable, Blockbuster Video in the US has gone broke. As widely reported last week, the company filed a voluntary Chapter 11 petition in U.S. Bankruptcy Court in New York, listing assets of $1.02 billion and debt of $1.46 billion. The company’s largest trade creditor is Twentieth Century Fox Home Entertainment with a $21.6 million claim.
But in what could be good news for the Australian Blockbuster’s, non-U.S. operations were not included in the filings and are not parties to the bankruptcy proceeding.
Blockbuster says all its U.S. operations, including its stores, DVD vending kiosks, by-mail and digital businesses, are open and serving customers in the normal course and that the company is fulfilling all orders as usual, including continuing to provide access to new releases the first day they become available, and for the time being, all 3,000 of the company’s stores in the United States will remain open.
In Australia, nearly all of the Blockbuster stores are franchises owned by small family businesses where the biggest threat is the change in technology allowing the delivery of rental material over the internet as well as the threat of illegal downloads such as through peer to peer networks.
One of the challenges that video library’s saw back in the early 2000s was the advent of the DVD and retail DVD, where you could go to your local Kmart, Target and you could buy the DVD. You could rent a movie from your local video library, but they refused to sell those movies, and in the last 10 years, the sales market has gone from some $250 million to $1.5 billion with the franchisee missing out on the sales action. The biggest challenge facing video stores now is the download model. Legal or otherwise.
Our society is broken up into many demographics, and video rentals fits into some groups lifestyles where it doesn’t in others. In these changing times where players like Sony allow rentals via a Playstation over the internet, the role of the video library must adapt to meet the changing needs of viewers. If nothing else, traditional broadcasters are on the side of the video library encouraging movie goers to watch commercial free movies because of the treatment they tend to give movies in the quest of fitting a few more ad breaks in, and on the other side of the coin, the price of DVDs in the Supermarkets are near the price of rental.
Australians love to own their own copy of a movie. How they get that copy is their choice and there are many ways to acquire it. The question is, will traditional video libraries be able to maintain a viable business without going the way of Blockbuster in the US.
This week on Tech Talk Radio
- David Glover (above left) from Microsoft is live in the Tech Talk studio to tell us what’s in store for Phone 7
- Was Peer to Peer responsible for the demise of Blockbuster video in the states
- Adam Turner catches up with Akamai, the people behind some of the world’s biggest online services and
- Microsoft licenses free anti-virus for SMBs from next month