Variety: Blockbuster Could Have Bought Netflix for $50 Million

Variety has an excellent analysis of the troubles that Blockbuster is facing in the story "Blockbusted!" In the article a former Blockbuster executive is quoted as saying:

“We had the option to buy Netflix for$50 million and we didn't do it. They were losing money. They came around a few times," he recalls. Instead, in 2000, Blockbuster inked a 20-year exclusive video-on-demand pact with Enron as the energy conglom launched into telecom. Blockbuster canned the pact after nine months. Netflix is now worth $1.4 billion. Blockbuster’s market cap is about $850 million.

The story also says that Blockbuster is selectively closing stores, a move that will help the turnaround. A consultant suggests that Chapter 11 will enable Blockbuster to get out of leases and help it reduce the cost of running 9,100 stores, something that would help the troubled company reinvent itself.

Thanks to Joe for sending this in.

Comments

[scotty321]

Sounds like just the latest in a series of stupid moves over the last decade that has caused Blockbuster to alienate themselves from their own industry and their customers.

I can't think of ANY company in recent years that has tainted their own brand image as effectively as Blockbuster Video. Customers HATE Blockbuster Video more than just about any other company besides cell phone companies.

Some things to consider:

1. Blockbuster censors their movies. You won't find any unrated versions or "director's cuts" at Blockbuster -- only "sanitized versions" of movies. Netflix has ALL versions of their movies.

2. Blockbuster hates independent films. If you're lucky, you may find a HANDFUL of "popular" independent films on the shelf, but that's about it. Netflix has the largest selection of independent films in the country.

3. Blockbuster lies to customers. For example, they CLAIM that they have no late fees for in-store rentals, but if you actually keep the movie for more than 7 days, your credit card is charged for the full purchase cost of the movie. Netflix really doesn't have any late fees.

4. Blockbuster has no quality control with employees. Ask just about anybody you know if they've ever been accused of NOT returning a movie to Blockbuster when they actually HAVE returned a movie to Blockbuster -- you'll find out that this problem is more common than you would expect. At one local store here in Los Angeles, there was a crime ring made up of the local Blockbuster employees who were STEALING videos after customers returned them.

5. Blockbuster has no original ideas or innovations. If they did, they would have invented NetFlix themselves. But they didn't. So all of us are lucky that Reed Hastings invented NetFlix.

Blockbuster has ruined their reputation with consumers, and consumers will not forgive them for this. And all of the issues above are STILL not solved with Blockbuster, so it's not like things are even changing for the better.

Consumers have spoken, and consumers have seen the light: Blockbuser is horrible, NetFlix is fantastic.

[Morgan]

Mostly I find accusations of people shilling for Netflix to be inaccurate and uncalled for, but if scotty321 is not a shill then I do not know what a shill is.

Blockbuster doesn't stock NC-17 movies. This does not mean they don't stock Director's Cuts or that they otherwise censor movies. Studios often provide R-rated versions of NC-17 movies to circumvent Blockbuster's policy.

And I love Netflix, but they do not have all of versions of a movie. That is a blatant lie. Once Netflix stocks a movie it is rare that they will stock any new versions. It was only after years of requests that Netflix chose to stock the LOTR extended cuts and they don't often buy special/platinum/superbit, etc. if they're already renting an earlier version.

"1. Blockbuster censors their movies. You won't find any unrated versions or "director's cuts" at Blockbuster -- only "sanitized versions" of movies. Netflix has ALL versions of their movies."

This is more unture as of late. BB has more unrated & director cuts than NF does. This is a tired argument.

"3. Blockbuster lies to customers. For example, they CLAIM that they have no late fees for in-store rentals, but if you actually keep the movie for more than 7 days, your credit card is charged for the full purchase cost of the movie. Netflix really doesn't have any late fees."

Another tired argument.

You don't rent the damn movie FOREVER! After being LATE 7 ADDITIONAL days, they turn it into a sale. If you never bring it back, you still have what you paid for. Get off your lazy *ss and take it back! If you take it back within 30 days, they refund you except for a $1.25 restocking fee (which covers the paperwork & time that a CSR has to take to cober your lazy *ss!)

[BB edited movies]

I believe the editing people speak of happened during the era Wayne Huezinga (sp?) but no longer occurs. That said, I still hate Blaockbuster.

[BoyWonder]

No late fees... Technically, NFLX has them too. They will refuse t0 send you an additional film until you return your movie. How is that any different? It is simply a "different" way to pull the wool over your eyes. If you ordinarily rent 5 movies a month on a 3-out plan, that's 3.60 per rent. If you hang on to one, you can only rent 4 films, which costs you that 3.60... that's effectively a late fee.

The only difference between NFLX late fee and Blockbuster late fee is that most people on NFLX are avid movie watchers and won't keep a film. But there are many people who churn off of Netflix because they don't really watch that many movies. They realize that the value per rent of films isn't worth the 18 bucks a month if you aren't watching 5+ films a month. That's why Blockbuster stores still have 40M users and Netflix has 3.5M... NFLX is a good deal for those high-use customers, but not for the average joe.

[you shills are pathetic]

"Blockbuster censors their movies. You won't find any unrated versions or director's cuts at Blockbuster -- only "sanitized versions" of movies. Netflix has ALL versions of their movies."

Netflix has hardly any alternate versions of movies, so how can you claim they have "ALL versions"? Are you trying to be a shill?

Does Netflix have "American Psycho: UNrated Killer Collector's Edition"? NO.

Does Netflix have "Basic Instinct: UNrated Director's Cut"? NO.

Does Netflix have "Wild Things: UNrated"? NO.

BBO has all of them and more. So stop with the stupid lies. It's a toss-up. BB has some unrated director's cuts that NFLX doesn't have, and vice versa. BTW, just try to find "The Grudge: UNrated EXTended Director's Cut" on NFX. BBO doesn't have it, but some of their stores do. Use the Check My Stores feature. GreenCine also has it.

The only time Netflix will have the unrated director's cut is if it's the first version released on DVD or the only one in print. I laugh at the shills who claim Netflix has "ALL versions" of movies, or that they have the best versions. Netflix rarely bothers to update their inventory when a new version of some movie comes out. Just see if they get the new "Wizard of Oz" DVD when it comes out at the end of this month.

[you shills are pathetic]

"Blockbuster lies to customers. For example, they CLAIM that they have no late fees for in-store rentals, but if you actually keep the movie for more than 7 days, your credit card is charged for the full purchase cost of the movie. Netflix really doesn't have any late fees."

No, YOU lie to Blockbuster customers and the general public. BB doesn't charge ANYTHING on your credit card, unless you keep the movie for over a month. If you keep it one week past the due date, they will bill you $1.25 re-stocking fee when you return it. I don't have a problem with their "late fees" or "re-stocking fees", because I can return movies on time. Netflix also doesn't have a lot of the movies you can get at a typical Blockbuster store. And you sure can't get a Netflix rental on impulse. It's a wash.

"Netflix rarely bothers to update their inventory when a new version of some movie comes out. Just see if they get the new "Wizard of Oz" DVD when it comes out at the end of this month."

Or Titanic SE!

Or what about:
Casablanca SE
Star Trek Insurrection 2 disc set
Star Trek Nemesis 2 disc set
Spongebob Christmas
Tommy Boy Holy Schnike Ed.
Groundhog Day SE
Pitch Black UR Directors cut
Happy Gilmore SE
Billy Madison SE
Bourne Identity Explosive Ed.
The Jerk 26th Anniv.
Mummy Returns WS

All are available at BB - NONE at Netsux!

[NETFLIX HAS LATE FEES]

"No late fees... Technically, NFLX has them too. They will refuse t0 send you an additional film until you return your movie. How is that any different?"

DAMN STRAIGHT. The monthly fee and the limit on how many you can have out is a late fee. Take the monthly rate, divided by the plan's limit, divided by the number of days in the month. That's what it costs you every day of shipping, every weekened when Netflix stops working, every day of throttling, and every day you keep a DVD. Let's look at the 3-out plan, for example. $18 a month.

In Feburary, that's $18 / 3 / 28 = $.214 per DVD-day. Late fee = $1.50 / week.

In December, that's $18 / 3 / 31 = $.194 per DVD-day. Late fee = $1.355 / week.

You can rent at Blockbuster for $2 or less with the BB Rewards program. $10 a year, 1 free rental a month, 2-for-1 Mon-Wed, and a free rental for every 5 paid. You can get a better deal with BB Movie Pass or Hollywood MVP. UNLIMITED movies for $12-30 a month. And keep in mind, with Netflix, you WILL be throttled 50% or more if you return movies too quickly. So you lose even more money to Netflix's hidden late fees.

[LATE Fees + EARLY Fees = NETFLIX]

Actually, I would call Netflix throtling an EARLY FEE. The monthly rates and plan limits constitute a late fee, because you pay NFLX for every shipping day, every weekend break, and every day you keep your movies.

[Alan]

Is blockbuster corporate comment spamming this blog or what? I can't recall anybody I know having anything positve to say about blockbuster, most people I know hate it and have boycotted it by this point/

"Is blockbuster corporate comment spamming this blog or what? I can't recall anybody I know having anything positve to say about blockbuster, most people I know hate it and have boycotted it by this point."

No, we're not Blockbuster corporate. We are satisfied customers. We return our movies on time and have never paid a single late fee. We're happy to get movies from BB online and stores that NFLX doesn't carry. YES, there are folks who manage to watch movies within 2 weeks of checking them out. We don't have an irrational hatred of Blockbuster because they enforce the rules on lazy people like yourself who can't return movies on time.

[Ace]

Not BB Corporate? No, maybe not, but you have submitted 10 post in about 4 hours.

Not all from you... ok. sure. that's why completely seperate random people use words like "shill". It's not exactly in most people's daily vocabulary.

Way to go fan-boy. Keep pimping BB. They can't save themselves. It's an already sinking ship. They hit the Netflix iceburg long ago. The fact that they went from having late fees to having "return fees", a far more user friendly term, is practically proof of it.

Having a buisness model that COUNTS on your own customers being lazy or else you can't turn a profit is just bad buisness.

[NETSUX]

That's one of the things that's so weak about Netflix - they never get the newly remastered DVDs when they come out. They suck for avid audio-philes and video-philes who want a new anamorphic high-definition transfer or a DTS soundtrack. Because Netflix NEVER bothers to get those new DVDs with improved picture and sound or added special features. They didn't get "American Psycho: Unrated Spec Ed", and they still only have the R-rated version that is cut and censored. The word "asshole" is turned into "ass", changing the tone of the hooker video sex scene. Also, some of the sex is cut out of the NFLX R-Rated version. Their R-Rated copy of "Basic Instinct" is cut by 5 minutes, losing sex, nudity, profanity, and large chunks of the plot.

Netflix: Enjoy the Throttling. "Lord of the Rings: Extended Edition Trilogy" is a great example. Every Blockbuster and Hollywood had these movies months before Netflix decided to add them. BB online carried them from the get-go, because there was a huge demand. But Netflix sat on their hands with their thumbs up their @$$3$.

"Having a buisness model that COUNTS on your own customers being lazy or else you can't turn a profit is just bad buisness."

That's funny, since Netflix's business model counts on customers being lazy or else they can't turn a profit. You lame Netflix shill. Go back to your pathetic day-trading, "Ace." Also known as Aron, Trey/BadAss, Zachary T. Smart, and others.

[Yo Ace]

"Not BB Corporate? No, maybe not, but you have submitted 10 post in about 4 hours."

You would only suspect someone else of doing that because YOU'RE doing it. News flash for you: not everybody who posts within a 4-hour time frame is the same person. I know it is hard for someone like you to understand with your 5 identities. But there is such a thing as many people posting the same time and not being the same person. And lots of different people use the word shill. It's not a unique or obscure or unusual word, esp in regard to NFLX - the king of "undercover advertising."

Netflix actually does get some special editions of films, including the upcoming Wizard of Oz SE:

http://www.netflix.com/MovieDisplay?movieid=70039535&trkid=189530

Question - how many of you (on whatever service you use) actually bother to rent bonus discs? As much as I like extra features, I've found that bonus discs in general are kind of a waste of a rental - why use a slot to watch a bunch of featurettes and deleted scenes when you can use it to get an entirely different movie?

[hall]

"The story also says that Blockbuster is selectively closing stores"

There are FIFTEEN stores within 10 miles of me. Yeah, 10 miles can be a ways to drive, especially through town, but of the closest (7) stores, depending on where else we were going, any one of those could be easily on my way. I do think they have too many stores.

[B0mBjAcK]

People still rent movies? I can't remember the last time I rented a movie, if I want to see a movie I'll just go and buy it. DVDs are hella cheap online anyway so it doesn't make any difference to me.

Any way back to your bitch figiting girls, it's funny. I bet you all wouldn't be so big and brave in real life.

[B0mBjAcK]

People still rent movies? I can't remember the last time I rented a movie, if I want to see a movie I'll just go and buy it. DVDs are hella cheap online anyway so it doesn't make any difference to me.

Any way back to your bitch figiting girls, it's funny. I bet you all wouldn't be so big and brave in real life.

DVDs might be "hella cheap", but unless it's a movie you want to watch repeatedly, what's the point of owning a copy? Besides, a good chunk of what I (and a lot of other people here) rent consists of foreign/independent films, TV shows, anime, etc; those tend to be somewhat expensive if you're looking to buy...

"Is blockbuster corporate comment spamming this blog or what? I can't recall anybody I know having anything positve to say about blockbuster, most people I know hate it and have boycotted it by this point/"

I'm 40 years old and have NEVER paid a late fee for a movie or a library book. Some people (like me) are responsible and return our rentals on time. We don't bad mouth a business because we are too lazy to get off our asses and take them back. It appears that you and your "friends" are lazy.

[NetFux]

"Netflix actually does get some special editions of films, including the upcoming Wizard of Oz SE:"

They said they were getting "The Sting: SE" too. But the day of its release, it suddenly disappeared. I bet they look at these boards and add movies people claim they don't have. They don't actually bother getting most, but it lets the Netflix-lovers say "Look here!" Try finding "Conan the Barbarian" on NFLX. I got the 16x9 collector's edition from BBO. No such luck with Netflix. It's only Arnold Schwarzenegger's breakthrough role and maybe his best. No chance seeing it with NFLX.

Enjoy The Throttling.

[double dipper]

"People still rent movies? I can't remember the last time I rented a movie, if I want to see a movie I'll just go and buy it. DVDs are hella cheap online anyway so it doesn't make any difference to me."

Try buying Criterion Collection releases, or anime. The average ones cost $25-40 even at Deep Discount. We don't wanna get stuck with movies we don't really like. It sounds like you have more money than common sense, are easy to please, or know what you want before even seeing it. I wouldn't buy a DVD without renting it first even if I liked it in the theater. My opinion might have changed. Or it may be a flawed DVD release. Plus, there is the concern that the studio will try to double-dip us and release a "deluxe unrated special edition extended director's cut" a few months later. This is esp likely if the original is almost a bare-bones disc, like "Sin City." (no commentary, no trailers, no TV spots, just an 8-minute featurette...)

"

People still rent movies? I can't remember the last time I rented a movie, if I want to see a movie I'll just go and buy it. DVDs are hella cheap online anyway so it doesn't make any difference to me.

Any way back to your bitch figiting girls, it's funny. I bet you all wouldn't be so big and brave in real life."

Way to be an e-thug there partner. You sure showed em with the whole "you wouldn't be so tough IRL" all while making the statement behind your monitor. You're either an internet newbie, an idiot, or some stupid kid who hasn't matured enough to knew that those kind of statements are absolutely moronic and are as much of a waste of time as anything/anyone you are trying to belittle. No one gives a crap about who you think is tough or not, try to stay on subject and leave the useless banter out of it.