Sometime in the early part of this century the studios knew they wanted to convert to digital distribution. Numerous outfits including Blockbuster invested in the early digital technology, and the studios were among those.
However as time went on and Kiosks and By Mail emerged it was clear that Blockbuster's stores would have to adopt the same plan that the growing Family Video was successfully employing in the face of competition from Red Box and By mail. But if Blockbuster with more than 4000 stores nationwide began renting for less than $3.00 for the newest release and for one night like Family Video, it was going to be very difficult for the studios to entice customers to convert to VOD at prices of $4.00 and more for a one night viewing of a new release.
Family Video has been marginally affected by Red Box, at least not enough to prevent them from expanding while Blockbuster and Hollywood exited the market. They will not be adversly affected by VOD either, as a family will still rent a couple of new release for about the price of on VOD viewing, and the kids get their movies for nearly nothing. Further people like the experience.
What are you confused about son. They have a much better business model than Blockbuster ever had, for a smaller concern. Blockbuster was a huge growth business at the beginning and chose a model that was good for very fast growth, not the long term.
But here's the kicker concerning the FV stores, they make money on the video business and people like them. People get fair value in those stores, and it results in enough traffic to make the strip malls attractive to small business that feed off the traffic.
I know the stores are profitable from comparing their sales plan to that of blockbusters in conjunction with the third quarter Blockbuster financials from 2010. The savings in rental product purchased each quarter in conjunction with $2.50 per day for a new release disk makes a huge difference.. Can you imagine the difference in $2.50 per day and $1.00 a day in margin on revenue. And the customers are there in comparitive droves buying other merchandise as well.
In addition the real estate side of the business does equally well, if this company went public the owners would become fantastically wealth over night.
When Blockbuster had 3300 stores in the 3rd Q 2010, they weren't lossing enough money that a change of store plan wouldn't have saved the shareholders and paid the interest payments. Of course it should have been done in March of 2010 when they went back to late fees, and they should have bought the contact lists of Hollywood, they could have made the orphans an offer that would have hugely increased traffic.
Keyes and Icahn had another plan, and profits had no place in their plan, no siree.
Blockbuster was clearly not going to become profitable renting at five dollars for five days, with Red Box and others renting for one dollar for one day. And converting to VOD at high prices was not going to happen with Blockbuster's stores renting at a profitable $2.50 for one night, so the studios and Blockbuster made a deal.
The deal involved Blockbuster sacrificing their stores while paying the Studios for masive amounts of DVDs, in return for content contracts for the coming VOD plan yet years away. And so Blockbuster began closing stores and setting things in place to go to court. But in early 2009 they set up a Trust, and made all their subsidiaries pay the Trust fees for the Trademark usage. I think that Blockbuster Inc. also signed the same contract with the Trust and began paying part of their revenue as well, it makes sense to me.
Icahn made sure the assets were sold to just the right bidder, Dish, who was already in league with Google and others who want to be part of the coming IPTV market. Dish didn’t get the intellectual property. Instead they got the agreement that Blockbuster already had with the Trust as an assumed contract. But Blockbuster retained the original contract with the Trust that granted to Intellectual property to the Trust in the first place. This leaves the Trust dependent on Blockbuster Inc. and at the same time it’s savior.
By keeping all the details of the sordid plan from Investors and most Creditors it was not a problem to get the shares to this level, even while they were accumulated by parties connected to those who understood the plan. I believe a great deal of the accumulation was done in the days following the filing of bankruptcy. Now it’s just a matter of time till a merger is completed and VOD is rolled out with appropriate devices and an attractive offering.
You're seriously trying to convince people that the studios, who rarely agree on anything as a whole, agreed to help Blockbuster in and out of BK for the opportunity to have them a partner in VOD years in the future? Why would they take such a risk? Why do they need Blockbuster? Please don't tell me the name thing because that didn't help Blockbuster against Netflix or Redbox.
I'll grant you that the trust is a head scratcher, but come on. Have you ever heard that the best conspiracies are the ones with the fewest people? But you're saying the entire video industry is in on this one?
I think I'll stick to reading Flourfaces posts, at least his have conviction and not conjecture.