Blockbuster to focus on Blu-ray

[zippyjuan]

A move like this could help tip the HD-DVD wars in favor of Blu-Ray. If that is all people can find, that is what they will buy. I think it is a surprising move given that they could get HD-DVD discs more cheaply than the Blu- Ray ones.
http://news.bbc.co.uk/2/hi/business/6762621.stm

Blockbuster to focus on Blu-ray

Blockbuster says customers are opting for Blu-Ray
Film rental firm Blockbuster is to rent high-definition DVDs only in the Blu-ray format at 1,450 US stores.
The move is viewed as a blow for the rival Toshiba-backed HD DVD format - which has been battling against the Blu-ray format, supported by Sony.

Blockbuster said that consumers have chosen Blu-ray over HD DVD in the 250 stores where both were available.

The limited choice of titles in the HD DVD format was also a factor in focusing on Blu-ray, Blockbuster said.

"The consumers are sending us a message. I can't ignore what I'm seeing," Matthew Smith, senior vice president of merchandising at Blockbusters, told the Associated Press news agency.

Mr Smith added that most studios were offering films on Blu-ray, with the exception of Universal which has been supplying films on HD DVD alone.

The North American HD DVD Promotional Group said Blockbuster's move was short sighted, and had been prompted by the success of films released exclusively in the Blu-ray format in early 2007 such as Casino Royale and Spider Man.

"I think trying to make a format decision using such a short time period is really not measuring what the consumer is saying," said Ken Graffeo, co-president of the group.

The HD DVD format will still be available at Blockbuster in 250 of its stores as well as via the internet.

[Skidude]

Blockbuster is a declining company and one that has ignored it's consumers in the past (slow adoption of DVD). They're essentially irrelevent in this war.

[InfiniteNothing]

That seems a little bitter ski. Do you own an HDDVD player?

[ray]

Quite frankly this is a stupid move since Netflix offers (and probably will continue to offer) both HD DVD and Blu-Ray movies for rental. Why pick one when you can offer both?

[InfiniteNothing]

Blockbuster will still offer HDDVD online. I guess they just don't want to be stuck with a stockpile of HD DVDs. I'm non sure.

[ray]

Blockbuster will still offer HDDVD online. I guess they just don't want to be stuck with a stockpile of HD DVDs. I'm non sure.

I can certainly see that viewpoint, but isn't one of Blockbuster's biggest selling points of their online service the fact that you can return you online rentals at any store and get a new rental from the store? If they are trying to compete with Netflix, you would think they'd offer both.

[DarkFury]

I wouldn't be surprised if Sony handed BlockBuster some money under the table to do this...

[Paymaster]

Why pick one when you can offer both?

Why don't restaurants offer both Pepsi and Coke? Why pick one when you can offer both? It's because if they sign an exclusive contract with one vendor, they get a better rate. It could very well be the same thing going on here.

I'm not even sure that I would refer to this as "under the table" as DF did... it's a standard business practice. Yes, the consumer loses choices, but lets face it, Blockbuster is looking out for their bottom line.

[DarkFury]

Why don't restaurants offer both Pepsi and Coke? Why pick one when you can offer both? It's because if they sign an exclusive contract with one vendor, they get a better rate. It could very well be the same thing going on here.

I'm not even sure that I would refer to this as "under the table" as DF did... it's a standard business practice. Yes, the consumer loses choices, but lets face it, Blockbuster is looking out for their bottom line.

Well.. considering we are talking about a "format war" that more or less threatens the future existence of one format or the other. It really doesn't equate to the exact same thing as the "Coke/Pepsi" deal.

Most restaurants don't serve Coke or Pepsi in bottles... you get it draft from the tap. Still all of your customers can drink whichever product you serve. Blockbuster is in the business of selling/renting MOVIES... regardless of format (if you notice in the games section, the rent XBox, PS3, and WII games... so that they can satisfy cross platforms.)

The format on which a movie is released is usually irrelevant to a company like Blockbuster unless some money has changed hands in their favor to promote Blu-Ray over a HD-DVD. And you can believe that if they don't sell/rent HD-DVDs in the future their might be some litigation of "anti-trust" placed against them which would allow HD-DVD from to be available equally to Blu-Ray's offerings.

Kinda like the deal that Coke and Pepsi had in the early days... Coke as the #1 soft Drink was paired up with McDonalds as the #1 Fast food joint... and Pepsi paired up with Burger King,which was #2 back then. Back then, Coke wasn't allowed to push it's business to BK... however when PEPSICO moved into the "fast food" market with Pizza Hut/KFC/Taco Bell, the restriction for Coke to be with BK was lifted... and BK switched over since PEPSICO was forming a fast food/snack food conglomeration that threatened it's position in the fast food market.

Of course since then, PEPSICO has spun off the fast food components to Yum Brands now, so it's kinda irrelevant now. But back in the day when the path was being forged, the stakes were high as to who would be "top dog" in the industry and legally they were watched. I don't see why this current format battle wouldn't be watched in similar fashion at this point.

But seriously, some special deal must've come to Blockbuster in order for them to make an announcement like this... cause the risk is really high stakes here for the future of HD content.

[Skidude]

Let's look at this realistically. Blockbuster has lost $1.8bn in the last 3 years. Last year they made .7% profit on 300m in declining revenue (200m decline the year before). They are shutting down stores as they are facing stiff competition from all online services.

Meanwhile, they are carrying BR discs in only 25% of their total stores, of those, 16% will also have HD-DVD.

Finally, Blockbuster online keeps all movies, to compete with Netflix.

In an interview with the COO of Blockbuster he said that the only reason why they are renting is because some gamers with the PS3 would rather not buy. Fine by me, if anything this hurts BR supporting studios who make less on rentals than they do on actual disc sales. The COO also said that this was only in response to "market demand", which is a transitional term and he acknowledge that it can change at any time. He reiterated that this is not a BR endorsement, at all.

If anything this announcement shows that the traditional rental store model is on its way out.