Netflix and Redbox vs. Blockbuster

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In a discussion of distribution models, yesterday I read an interview, featured on Paid Content.org, with the new CEO of Blockbuster Video/Media company, Jim Keyes. Something of a visionary in the world of retail, Mr. Keyes has a very dynamic vision of the whole picture of video distribution and surprising to me, did not feel threatened by the up and coming video companies, Netflix and Redbox.

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One point that stuck out in my mind from his comments: the comparison of content between Netflix and Blockbuster.

While Netflix boasts a huge library of content, Keyes said that their business was not about selection but about accessibility to new content. His approach is to give access to the latest releases. This window of demand is where the money is in his business plan.  Blockbuster, along with other video rental stores, still holds second position on the totem poll when it comes to release dates, just behind theatrical releases. On the other hand, Netflix, a subscription based service, sits near, or at the bottom of the poll.

In opposition to Redbox’s vending machine convenience, Keyes said that this is only one way in which content is now available for distribution. What he meant was that some people want their media on a DVD, some want to upload it to a portable device, some want online access immediately, and some want it on-demand in their home.

Neither Redbox nor Netflix was making a major dent in Blockbuster’s overall business operations because of scope and size. Blockbuster does have something that neither of these new competitors has, a physical presence. Keyes seems poised to take advantage of this difference, using their stores to explore business opportunities that I will not discuss here.

In conclusion, some personal thoughts: Netflix does boast a large inventory. We’ve been enjoying the service for the last two months. As we’re not too hip on the latest thing, the vast selection of classic films is quite enjoyable.

However, the demand for the latest content is a driving force in this industry. In a forward thinking business model, the ability to produce content that sells in abundance is essential to survival.

So here is the paradox. Some treat films as treasures, especially in an ownership sense; others consume films–thus the rental model. Rentals like theatricals depend upon new content. However, rentals also have the advantage of offering older content. When I watch a classic film, I am paying no one except the distributor and maybe a few rights holders for that film. The fact that I am watching a classic film that is still generating a residual income seems to be the strongest argument for creating content with an extended shelf life. 

I don’t agree that from a producer’s point of view, the best option is to produce an abundance of fluff. Again, I point to a filmmaker like Zhang Yimou–prolific, current, and meticulous in his work. This seems to be the median balance for work.

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Brent is married to a very supportive woman, is father of a large family, and went into business for himself in 2006.

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