The iPod Shuffle - "I Ain't Sh*t"
4.6 The Cooler

What’s Happening In Movie Rentals?

By 04.06.11

We can only hope.


Blockbuster is a bit like Paris Hilton: somehow considered attractive despite all the blatantly obvious flaws and problems. Blockbuster, over the last decade or so, has literally lost billions of dollars. Yes, billions with a B, approximately $10 billion or so if you go through all the loss reports. It’s a decaying company saddled with enormous debt with a business model destroyed by Netflix and Redbox, struggling to so much as make a blip in the new landscape of home video.

So why are so many people fighting over it? We’ll tell you, plus a startup comes to an unsurprising legal pass, here at Uproxx News.

First, you’d think a company that got delisted from the New York Stock Exchange last year and is currently in the process of shuttering 700 of its remaining 2400 stores after closing more than 900 stores trying to prevent the bankruptcy it’s now in would not be economically viable and nobody would be interested.

And you’d be enormously wrong! Dish Network, noted investor Carl Icahn, a group of Blockbuster debtholders, and a few liquidation companies are all currently fighting it out to see who can pay the most to buy a company that can only stay functioning by closing its stores.

Blockbuster is trapped in a death spiral: while it has arms like Blockbuster Online and Blockbuster Express, a kiosk service, the linchpin of its operations are its brick-and-mortar stores. The idea is that if you hate a movie, you can just turn it in to a kiosk or a local store for a new one..but there are no local stores, because Blockbuster has to keep closing them.

What makes Blockbuster actually valuable, at least to Icahn and Dish Network, is that, unlike Netflix and Redbox, it gets new releases first, something it’s been carping on incessantly in its ad campaigns. How this is remotely an advantage, considering Blockbuster has had this for years and is in the process of being torn apart like an antelope beset by jackals like…Carl Icahn and Dish Network, is something we’re not sure anybody has thought through.

The liquidators want it because they’re salivating over selling you a used DVD for $20, and the debtholders (which include major movie studios) want it because if Blockbuster falls, the big dog in the house is Netflix, and that terrifies them.

The studios have spent months talking tough about how Netflix doesn’t scare them and Netflix needs to bow down to them, while Netflix has chuckled and watched its stock price go up. If Blockbuster falls, and falls for good, they’ll be forced to give back that 28-day window Netflix gladly gave up for their back libraries and the studios will find themselves beholden to a company, a situation they don’t enjoy after years of being in controlling, abusive relationships with other companies.

Currently, Dish Network is winning, but don’t count out anybody yet: this will be a dying company for a long, long time to come.

Meanwhile, Zediva, a start-up, thought it had a clever way around the new release window: rent a DVD player and new release from them, and they’ll stream it across the Internet! Take a guess what the MPAA did when hearing about this. If you guessed “massive innovation-limiting lawsuit”, you’d be correct.

As this happens, the stream of torrents grow ever larger…

[news-links]

  • Blockbuster grows ever closer to finally going away for good. A bid by filmmakers screwed by Blockbuster’s anti-NC-17 and anti-maturity policies to nuke the company from orbit was unfairly rejected. (Wall Street Journal)
  • Speaking of being nuked from orbit, the MPAA started that process with Zediva today. (Macworld)

[/news-links]

[news-morenews]

  • Meanwhile, in our ongoing series of reports on Germany being weird, we have the humble park bench. The problem? Teenagers like to sit on the tops of the benches, resting their feet on the seats. Teenagers have sat on benches like this for decades, but only in Germany would there actually be stabbings over it: a poor defenseless 69-year-old man…oh, wait, the old guy stabbed the teenager. That’s a switch. Anyway, Eppenheim, Germany, has introduced a new bench with seats on the top of the bench, in a heroic bid to stop more stabbings. (Yahoo!)
  • And just so Austria doesn’t feel left out, the seven-year battle over whether or not you can copyright a chocolate bunny has hit another snag. Yes, this has been going on since 2003. (Wall Street Journal)

[/news-morenews]

[news-stats]

  • A share of Netflix is worth about twice a share of all the major studios. Added together. $244 per share right now, to be exact. (Google Finance)
  • To give you an idea of how exaggerated digital piracy is in terms of cost impact, by the way, apparently “Nude Nuns with Big Guns” is apparently worth $150,000 per viewing…at least according to a for-profit lawsuit the producers filed. (Wired)

[/news-stats]


TOPICS#NETFLIX
TAGSBLOCKBUSTERdish networkLAWSUITSzediva

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