Why Apple should buy Blockbuster Video

“Poor Blockbuster Video hasn’t made a profit in years, the stock is down about 90 percent from its 2002 high, NetFlix is cleaning its clock, and nobody – I mean NOBODY – thinks the future looks in any way rosy for this pioneering video rental chain. Steve Jobs to the rescue? Maybe,” Robert X. Cringely writes for PBS. “Where Blockbuster shares are in the toilet, Apple shares are in the stratosphere where the difference between stall speed and cruise speed is so small that almost any turbulence could bring the stock down. Apple has two notable product challenges, which are managing the Intel transition for its computer line and keeping strong its line of iPod music players and the iTunes Music Store against increasing competition from all sides. Apple’s technique for managing both is to be aggressive and to as often as possible surprise customers with good news, not bad. That’s why Apple’s Intel product roll-out is going faster than originally announced – not because it is going smoother than expected but because Apple PLANNED to do it this way and simply look better. So, too, the Intel notebooks are shipping with faster-than-announced processors. Think that was some mistake on Intel’s part or good fortune on Apple’s? Think again: it was all planned. So, too, the continually refreshed iPod line with steadily lowering prices to draw-in more customers and fight-off more competitors.”

“Where Blockbuster is dumb and reactive, Apple is smart and aggressive, but all the maneuvers mentioned in the last paragraph can only help to maintain Apple’s current position. They won’t help the company and its stock price to grow further. That will require a whole new product initiative – one that doesn’t in any way weaken the other parts of Apple,” Cringely writes. “For a year now I have been writing that Apple is aiming to build a video distribution empire to match its existing music distribution empire. We’ve seen some of this take place, too, with Apple claiming to have distributed more than 12 million music videos, TV episodes, and motion pictures through the iTunes Music Store. Down the line we’ll see Video iPods with larger screens, the Video Express wireless access point-cum-H.264 decoder, faster Mac Minis with larger disk drives, and whole new versions of Apple’s seminal Front Row home theater application.”

MacDailyNews Note: Get your mind out of the gutter, Bob. wink

Cringely continues, “As soon as Steve Jobs can sort out his legal problem with little Burst.com and finish signing every movie and TV studio to an electronic distribution deal, we’ll see lots more announcements from Apple. Apple values Blockbuster for only two things – its customer list and neighborhood locations. Every other part of Blockbuster is literally useless, as I am sure Steve Jobs has told the Blockbuster folks over and over and over again. He has no use for Blockbuster management, labor, or even all that shelf space. All Steve values about Blockbuster stores are the sign and the checkout counter. By now he has so berated and brainwashed Blockbuster management that they believe they are not worthy and will accept whatever Steve deigns to sell to them or to let them sell to us. By now Blockbuster sees Apple and Jobs as their company’s salvation. They are ready to drink the Flav-r-ade. I’m not at all saying, by the way, that Steve Jobs is wrong in his assessment. Blockbuster IS in trouble and has shown itself to be generally clueless. They probably do need Steve, or someone like him.”

Full article — very interesting, as usual — here.

[Thanks to MacDailyNews reader “Rainy Day” for the link.]

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  1. A lot of people don’t like Cringely.

    I do. I enjoy his articles.

    Much better than Dvorak, but that is not saying much.

    Browse through his old predictions from a couple of years ago. He is not always right, but he is able to see trends.

  2. I’m sorry, did I miss the anouncement that Apple and b-buster were in talks? How does big Bob know Apple, oh wait, Steve Jobs even cares about b-buster? And explain to me in detail the advantage of buying the rights to a name brand that has the stink of death on it? Sure didn’t work with Napster. Cringley can be entertaining and sometimes insightful, but it seems his premise here is made of smoke.

  3. Why does Apple need a failing brand like Blockbuster when it has a top brand like iTunes ?

    Why does Apple need checkout counters when they do business on-line ?

    I understand the principle that Blockbuster is a business which is facing extinction and that it’s partly to do with Apple’s success. But I just don’t see why Apple needs to buy Blockbuster.

  4. OK, I finished the article. He does admit to making it all up. Still, why is driving to a store to load up an iPod better than pickup up a DVD there. Or better than doing the whole exchange through overnight mail? His Blockbuster model doesn’t work or me.

    And is it just me, or did Cringley slap Steve Jobs’ name all over that piece just to make his harebrained scheme seem more plausible?

  5. As he says, this is an alternate distribution model. The main idea is to get hardware/software into the hands of people who don’t already have them.

    People could buy an iPod at a Blockbuster, and download movies in-store. It can also be a benefit to drive people that do not own an Apple computer (or any computer for that matter) to purchase an Apple Computer.

    This is not really a discussion on buying a failing brand. This is exactly what Cringly states it is about. Creating an alternate distribution model of a revenue stream that would not interfere with its current revenues.

    Why is everyone so quick-to-judge? Relax, calm down, and take a look at the universal picture. Just because “you” can’t see why it is important, people in the “know” understand. After all… there are a lot of things Apple has done recently that we all thought NEVER would happen. You never know…

    MDN “maybe”… Maybe a good idea? or not?

  6. OK. Follow me here. I doubt there is any validity here…. but what if you you don’t have broadband, or something… and you go to the Blockbuster store with your iPod, download the movie using some sort of Mac POS, and voila, go home and watch your movie. I don’t know… could be something there… some sort of market. Maybe you own the movie… maybe it’s timestamped and deletes after a certain time..,.. I don’t know… but just something that popped in my head….

    …. hey,I’ve been drinking… cut me some slack

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