Blockbuster Tries To Save Itself - Again

In the continued search for a video delivery system that connects with modern consumers, Blockbuster is looking into a streaming VOD service for your TV. The streaming device would come in the form of a set-top box, similar to Apple TV. Blockbuster's current main competitor, Netflix, is also looking into a streaming service.

I think by now it's pretty clear that the future of video rental services lies in the digital marketplace. So where does Blockbuster fit in? First of all, The Hollywood Reporter makes a good point - by introducing a VOD service, Blockbuster risks cannibalizing their brick and mortar operations. While I understand wanting to cover all the bases in order to make the rental process as simple as possible, I think that the digital rental concept belongs to a company that can exist primarily within that sphere. Blockbuster can't be dipping their toes into the water to see if it's cold - they have to jump right in.

This is where Apple has a clear advantage. Besides being first to market with Apple TV and owning an established digital rental service, Apple's core business model for this service exists almost completely within the digital realm. There aren't other retail channels sucking resources from the primary venture. Being first to market has also allowed Apple time to work out the kinks with their set-top unit. When - and if Blockbuster introduces a competing service, they will undoubtedly go through some major growing pains - as most first generation tech does. Unless Blockbuster can come in at a significantly cheaper price then I think most of their potential customers would simply choose Apple TV.

That said, Blockbuster needs this - badly. As this 2006 Slate article pointed out, Blockbuster is on the decline and needs a major breakthrough to prevent the almost inevitable slide into bankruptcy. Right now, the company is suffering from Kodak syndrome - clinging to the business model that brought initial success in the face of cheaper and better digital competition.

Here's an idea for the Blockbuster exec reading this blog - dump all the resources you can into this VOD device and immediately begin transitioning from expensive brick and mortar retail by systematically closing all retail locations - find a way to dump them on another video rental dinosaur - Hollywood Video perhaps? I truly believe that this is the only way that Blockbuster can survive in today's marketplace.