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Failing Blockbuster Goes Tivo

October 15th, 2009 Leave a comment Go to comments


Lately it’s seemed like Blockbuster’s revenue is falling faster than it takes to return a DVD to the nearest Redbox kiosk. In July, it posted nearly $40 million in projected losses and in September it was announced that the rental chain may be forced to close an estimated 960 stores in order to stay afloat in the current economic climate. Regarding the possible closings, Blockbuster Chief Executive Jim Keyes said recently,

The store, we believe, has the ability to remain relevant indefinitely if we continue to change it.”

Facing intense competition from alternative rental sources like Redbox and Netflix, the struggling company has had to come up with creative solutions, the most notable of which has been a deal with Tivo, that went into operation on Tuesday. It gives Tivo users the ability to download movies for around $3 a pop and access to over 100,000 titles, and is only the beginning of several proposed ventures that Blockbuster hopes will satisfy customers, who have turning to other sources in record numbers.

It should prove more successful than its plan to purchase Circuit City for $1.3 billion in 2008: an idea that left skeptical investors cold, and sent Blockbuster’s stock price tumbling. When the Tivo deal was announced last March, Kevin Lewis, vice president of digital entertainment at Blockbuster told Reuters,

You will see us in a large number of other devices going forward. We need to be in the normal places that consumers want to watch movies.”

Despite all the recent difficulties, there does seem to be good reason for Blockbuster to remain optimistic. After its July low of 21 cents a share, by mid-August, it had already rebounded to $1.39. Lewis for his part, has his eyes on the future. He said,

The challenge of being a multi-channel retailer is you no longer can think only about the impact on the other leg. You have to think about what the consumer wants,” he said. “We are the only (company) in the works that can deliver via stores, digital downloads, kiosks … across all these channels.”

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