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Sun, Nov 08, 2009 - 07:43 AM EST  —  AAPL: 194.34 (+0.3099, +0.16%)  |  NASDAQ: 2112.44 (+7.12, +0.34%)

Analysts skeptical of Blockbuster’s Circuit City bid; knee-jerk reaction to Apple’s iTunes, Apple TV
Monday, April 14, 2008 - 04:55 PM EST

"Blockbuster Inc.'s attempt to buy Circuit City is baffling to many analysts, who think the video-rental chain needs more time to turn itself around before undertaking a costly acquisition," David B. Wilkerson reports for MarketWatch. "Another question on their minds is whether consumers will embrace the merged concept if it does become a reality."

"'I think it's kind of screwy,' says Michael Pachter of Wedbush Morgan Securities. 'Because if, in fact, you wanted to go to a big-box retailer to rent movies, why wouldn't Costco have them? Why wouldn't Target? Or Wal-Mart? If it's such a great business, and you can leverage the store base, why isn't everyone doing it?,'" Wilkerson reports.

"In January, Blockbuster got a jolt when Apple Inc. announced a movie-download rental service at its iTunes store. Consumers can rent new releases for play on a computer, iPod or iPhone for $3.99 for a 30-day period, while older titles go for $2.99. All of the major Hollywood studios are backing the offering," Wilkerson reports. "The news came a year after Apple unveiled Apple TV, which enables consumers to stream iTunes content, including movies, music and podcasts, from computers to TVs."

"In rushing to do the deal now, on the heels of Apple's move into movie rentals, Blockbuster may be repeating an age-old error commonly made by Hollywood studios, according to Ralph Tribbey, editor of the DVD Release Report, a trade newsletter," Wilkerson reports. "'Hollywood always gets ahead of itself,' Tribbey said, pointing to the panic among movie executives who historically feared that television, and later videocassettes, would wipe out or substantially curtail their businesses. The DVD-rental business should remain stable for many years, he said, even as more consumers download movies straight from computers to their TVs."

Full article here.

MacDailyNews Take: Number of movies we've rented via Apple TV in the last 30 days? Nine (9). From Blockbuster or any other outfit, brick and mortar or otherwise? Zero (0).


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Apr 14, 08 - 03:56 pm Comment from: Jay-Z

How can anyone with a functioning brain cell think that this will benefit either business?

Apr 14, 08 - 04:01 pm Comment from: Jubei

Let them do their thing and fail. In the end those customers will end up buying Apple TV. So more sales for Apple TV. grin

Apr 14, 08 - 04:03 pm Comment from: ken1w

> why wouldn't Costco have them? Why wouldn't Target? Or Wal-Mart? If it's such a great business, and you can leverage the store base, why isn't everyone doing it?

Brilliant analysis, probably from the same folks who predicted failure of Apple retail stores.

Apr 14, 08 - 04:04 pm Comment from: chesspiece

MDN editor has rented nine (9) movies from Apple TV and none from Blockbuster? I'm shocked! SHOCKED!

Apr 14, 08 - 04:05 pm Comment from: Red One

My stats:
Rented movies from Redbox: 10
Rented from Apple/Blockbuster/Neflix: 0

Apr 14, 08 - 04:10 pm Comment from: ron

My rented movies from anywhere = 0. So there!

Apr 14, 08 - 04:12 pm Comment from: Cire

Okay, my turn: Movies rented from iTunes: 2 (+4 tv shows purchased)...number from Blockbuster/Netflix/Redbox: 0.

Apr 14, 08 - 04:20 pm Comment from: January 24, 1984

iTunes: 4
Blockbuster: 1

Month before:

iTunes: 1
Blockbuster: 4

It grows on you.

Apr 14, 08 - 04:30 pm Comment from: zaxxon4

It's more than likely recognition of the impending death of their business model. Netflix cleaned their clock in renting over the web. Red Box machines at most Wal-Mart and McDonalds locations, are poised to kill the weekend impulse rental market. Lastly Apple has an almost unstopable product in the new film download market.

They are chosing to adapt by changing markets. If they don't they will die

Apr 14, 08 - 04:37 pm Comment from: NeonRed

With the Gasoline cost trending up– online renting will trend up along with it.
Tipping point for many transactions in the future.
Subtle, yet steady, pressure to change lifestyle habits.

Apr 14, 08 - 04:45 pm Comment from: Olmecmystic

Yeah, it's "screwy" all right.

As I said earlier, this is nothing more than two dinosaurs looking to screw. And the problem with two dinosaurs looking to screw is that they're still two dinosaurs whose ultimate fate is already sealed.

Peace.
Olmecmystic wink

Apr 14, 08 - 04:53 pm Comment from: aka Christian

I love my local video store, the last indie place standing whose survival is dependent on the fact that they have, like, EVERYTHING: anime, documentaries, television series, classics, cult films. I will continue to support them as much as I can, but I rented a flick from Apple over the weekend on my 24" iMac, and it was a painless experience that saved me from having to go out in the crappy Minnesota weather. I can see an Apple TV in my future, probably next fall when the weather turns again.

Apr 14, 08 - 05:37 pm Comment from: KenC

iTunes movies rented: 3
Blockheader: 0

I can't remember if Cringely wrote about this, but Blockbuster would be better off setting up kiosks for iTunes downloads, and letting people fill up their iPods with music and movies that can be sideloaded back to their Macs or PCs when they get home. As the kiosk would be the central server repository, the downloads would be superfast compared to the internet. Darn, I just realized the speed issue is really with HD material, and you can't download HD to anything but the AppleTV so far.

How is this better than just picking up the DVD? Well, the DVD is never out of stock, right? No return trip, right? No scratched DVD, right? Infinite list of media, right? Instant supply, right? Lower cost, perhaps? No late fees, right? Digital media coolness, right?

This would be an evolution of the Starbucks iTunes setup, where you can only download music.

Apr 14, 08 - 05:46 pm Comment from: c

In the past month

iTune rentals: 4
Others, anywhere, any stripe: A big zero

Apr 14, 08 - 05:51 pm Comment from: I'm going to Redbox!

Nearest one is 50 miles. Gotta be some great deals there! To bad gas is $3.70 a gallon.

Apr 14, 08 - 05:52 pm Comment from: Arawan

I swore I would NEVER rent a video again when I got hit by the false late fees scam that Blockbuster ran.

Since AppleTV started renting, my family has rented at least one movie per week..

Apr 14, 08 - 06:15 pm Comment from: occam's razor

We ain't got no stinkin movies here in the UK. I may, on occasion, torrent a title or two. Let me pay, let me do the right thing.

Apr 14, 08 - 06:41 pm Comment from: Alec

I save tons of money renting from iTunes. No more late charges. Instant gratification. You can watch previews. Can't do that at Blockbuster.

Apr 14, 08 - 08:16 pm Comment from: MacSheikh

iTunes Rental/Purchase: 0 (not available here - yet)
Netflix: 0 (not available here)
Blockbuster: 0 (not available here)

There! Hope Steve will give me something to watch soon! :-(

Apr 14, 08 - 08:24 pm Comment from: HotinPlaya

with version 2.0 9 rentals

with the 2.01 up date, 2ea and I doubt very few more

with 2.0, if you started a movie, (like when the kids go to bed) and when you got tired you paused it, it would still be available the next night after the kids are in bed.

Not any more, 24 hours and it is gone!, with our lifestyle, we need 2 nights to finish a movie, just give us 72 hours, and we are back in

Apr 14, 08 - 08:38 pm Comment from: HMCIV

There are good brick & mortar video stores out there. Most are local guys who love what they do. None are called Blockbuster!

Blockbuster however is PANICED! Maybe they can better spend their $$$ buying that Mac Clone Company that just got a cease in desist order.

Apr 14, 08 - 11:52 pm Comment from: Cubert

I got a rock.

Apr 15, 08 - 03:08 am Comment from: Petey

I thought Blockbuster went out of business years ago!

To be honest, they should have foreseen this years ago and got into movie downloads long before Apple joined the market.

MDN's comments are exactly right - this is a knee-jerk and panic action by a company with no vision and is an action to try and salvage a business model that has been changing for many years.

But Blockbuster, just like the majority of Apple's competitors have no vision or instinct to survive by innovation.

I seriously cannot see how this will compete with the iTunes Store.

Physical media is diing and that's a fact - downloads, real-time streaming and subscription based online services are the future of all paid for entertainment.

RIP Blockbuster 2010.

Apr 15, 08 - 06:47 am Comment from: biker crd

Movies in the last month.
Apple TV: 3
DVD: 0

I also dropped HBO and Stars from my cable

Apr 15, 08 - 06:52 am Comment from: Bob

I think zaxxon4 got it right. Blockbuster sees the writing on the wall, their business model is under attack, first from Netflix & now from iTunes. They want to use their proposed acquisition of Circuit City to move into a different market. They purchase Circuity City now while they still have the resources to pull it off & then in a year or two the sell or spin off their "movie rental division". It's a gamble, but what else do they got? Of course, they're betting that they can turn around Circuit City & make it profitable again.

Apr 15, 08 - 08:13 am Comment from: derekcurrie

1) Circuit Sh*tty sucks.
2) I hate Viacom for their sleezy business practices.
3) I want Viacom to go bankrupt.
4) Viacom own Blockbluster.
5) What better way to hurt Viacom that to have dying Blockbluster buy Circuit Sh*tty? That's two! Two! Two crap companies in one! How can you NOT fail!

So PLEEZE let this deal go forward!
;-D

Apr 15, 08 - 08:44 am Comment from: Steve516

Every week I download the $0.99 movie of the week. Sometimes I don't even watch. But it's my campaign to help Apple... One dollar at a time!

I have downloaded probably 7 movies all together. A couple were purchases, and the rest rentals. I do wish we could have more time with them. In the old days, we had 3 days with a physical VHS rental. That seems about right.

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