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$1.24 0.06 (5.08%)
12/3/2008 4:00 PM

Blockbuster, Inc. (BBI)

CAPS Rating:
*

The Company is a global provider of in-home rental and retail movie and game entertainment, with over 8,000 stores in the United States, its territories and 22 other countries.

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Avatar LazyTech (< 20) Submitted: 1/27/07 11:21 PM : Outperform Start Price: $6.36 BBI Score: -41.91

As a consumer, I've had a complicated relationship with Blockbuster. As a young adult, I really hated what they were doing to the landscape of the local eclectic video store. However, just like McDonalds, Wal-Mart, Starbucks, and other mom&pop killers, they didn't get to be that way by sucking at their business. Reluctantly, I got a membership, and the local stores have pretty much vanished but for niche outlets.

About four years ago, I finally dropped them in disgust after a particularly maddening exchange with a somnambulant clerk over some stupid misunderstanding, and went across the street to Hollywood Video (ticker:MOVI). They were edgier, had a better cult and anime selection, and a much better game rental inventory. But, MOVI has been on a slow decline ever since I signed up with them. The moment my local store's 20something manager finally quit, the turnover has been huge, and it's clear that no employee is really into the job at all.

All this time, I avoided NetFlix. I didn't like the idea of waiting around for movies in the mail. As an Internet nerd, I figured if I was going to be waiting anyway, I should be downloading (a bit more on that later).

But a year back I caught wind of BBI's free e-coupon exchange deal, and saw immediately that this meant I'd be paying less for a BBI subscription with practically double the movie rentals. BBI's mail order business has been lickety-split quick, customer service in the event of damaged discs or whatever has been outstanding, and the library when I signed up was identitcal to Netflix as far as I could tell.

BBI wasn't the first to the mail order game, but they've certainly put a lot of thought into how Netflix works, and are now executing well at beating NFLX by becoming NFLX -- except with 5,000 retail outlets and a universally-recognized brand.

Today, the tie-in with the stores is automatic, and with in-store signups to the online service coming up, they should expect to see their foot traffic see a significant bump this coming year -- and all those returns for free movies means an opportunity to sell new DVDs, candy and soda, etc.

So, NFLX certainly enjoys the first-to-market advantage in this whole mail order movie rental thing, but sadly, nothing they do is patentable or defensible.

So, until the cable companies get their video-on-demand act together for a comparable price (sorry, I still won't shell out for digital cable when I have little kids constantly smearing peanut-butter on my CRT TV screen), I think BBI will be summarily drinking the blood of both MOVI and NFLX over the next 24-36 months or so.

And who knows -- if BBI can rise up and smite NFLX like a proper Goliath, I don't see why they couldn't get a peice of that VOD market when it's matured up a bit, too.

Now, all that said, there is a LOT of room to discuss the financial between these two companies. Just one example: NFLX has under a thousand employees, while BBI has over seventy thousand, but BBI only has five times NFLX's revenue. Oh, and NFLX is posting profits, while BBI isn't. But on the other hand, BBI has five times the revenue, is a solid company with a lot of assets, and can afford to play Intel to Netflix's AMD for a while yet.

FD: I don't own any shares of BBI today (Jan 27) but I fully intend to on Monday morning, hopefully at a price near by Friday's close. That one day 4% drop against NFLX's earnings announcement is pure down-market-Friday jitters, IMO.

Oh, and here's a link. While writing this, I came across a similar position stated on Seeking Alpha: http://media.seekingalpha.com/article/25069

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Avatar equalfuture (93.16) Submitted: 4/09/08 5:51 PM

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GOOD WRITE UP, i guess i am a little more sensitive, i also had a run in with a block buster employee, she actually was some sort of manager, straight out of a trailer park, with a mouth and personalitynot even found in a coal mine, but regardless, i think the brick and mortar stores are going to be a big problem, talk about a gorrilla on your back.
brick and mortar stores can and do help many online businesses, but not in this case and with this product, when buying a shirt, jeans or shoes, i and many people want to try on several models, for fit and comfort etc. when renting a dvd i want to read the cover or see the stars, i can do this just as well online as in a store, candy and popcorn, is purchased at a supermarket, DO something with the stores, sell them, put them to better use.

Report this Post Reply

Avatar equalfuture (93.16) Submitted: 4/09/08 5:51 PM

Recs: 0 | Rec This

GOOD WRITE UP, i guess i am a little more sensitive, i also had a run in with a block buster employee, she actually was some sort of manager, straight out of a trailer park, with a mouth and personalitynot even found in a coal mine, but regardless, i think the brick and mortar stores are going to be a big problem, talk about a gorrilla on your back.
brick and mortar stores can and do help many online businesses, but not in this case and with this product, when buying a shirt, jeans or shoes, i and many people want to try on several models, for fit and comfort etc. when renting a dvd i want to read the cover or see the stars, i can do this just as well online as in a store, candy and popcorn, is purchased at a supermarket, DO something with the stores, sell them, put them to better use.

Report this Post Reply

Avatar equalfuture (93.16) Submitted: 4/09/08 5:52 PM

Recs: 0 | Rec This

GOOD WRITE UP, i guess i am a little more sensitive, i also had a run in with a block buster employee, she actually was some sort of manager, straight out of a trailer park, with a mouth and personalitynot even found in a coal mine, but regardless, i think the brick and mortar stores are going to be a big problem, talk about a gorrilla on your back.
brick and mortar stores can and do help many online businesses, but not in this case and with this product, when buying a shirt, jeans or shoes, i and many people want to try on several models, for fit and comfort etc. when renting a dvd i want to read the cover or see the stars, i can do this just as well online as in a store, candy and popcorn, is purchased at a supermarket, DO something with the stores, sell them, put them to better use.

Report this Post Reply

Avatar equalfuture (93.16) Submitted: 4/09/08 5:52 PM

Recs: 0 | Rec This

GOOD WRITE UP, i guess i am a little more sensitive, i also had a run in with a block buster employee, she actually was some sort of manager, straight out of a trailer park, with a mouth and personalitynot even found in a coal mine, but regardless, i think the brick and mortar stores are going to be a big problem, talk about a gorrilla on your back.
brick and mortar stores can and do help many online businesses, but not in this case and with this product, when buying a shirt, jeans or shoes, i and many people want to try on several models, for fit and comfort etc. when renting a dvd i want to read the cover or see the stars, i can do this just as well online as in a store, candy and popcorn, is purchased at a supermarket, DO something with the stores, sell them, put them to better use.

Report this Post Reply

Avatar equalfuture (93.16) Submitted: 4/09/08 5:52 PM

Recs: 0 | Rec This

GOOD WRITE UP, i guess i am a little more sensitive, i also had a run in with a block buster employee, she actually was some sort of manager, straight out of a trailer park, with a mouth and personalitynot even found in a coal mine, but regardless, i think the brick and mortar stores are going to be a big problem, talk about a gorrilla on your back.
brick and mortar stores can and do help many online businesses, but not in this case and with this product, when buying a shirt, jeans or shoes, i and many people want to try on several models, for fit and comfort etc. when renting a dvd i want to read the cover or see the stars, i can do this just as well online as in a store, candy and popcorn, is purchased at a supermarket, DO something with the stores, sell them, put them to better use.

Report this Post Reply

Avatar equalfuture (93.16) Submitted: 4/09/08 5:53 PM

Recs: 0 | Rec This

GOOD WRITE UP, i guess i am a little more sensitive, i also had a run in with a block buster employee, she actually was some sort of manager, straight out of a trailer park, with a mouth and personalitynot even found in a coal mine, but regardless, i think the brick and mortar stores are going to be a big problem, talk about a gorrilla on your back.
brick and mortar stores can and do help many online businesses, but not in this case and with this product, when buying a shirt, jeans or shoes, i and many people want to try on several models, for fit and comfort etc. when renting a dvd i want to read the cover or see the stars, i can do this just as well online as in a store, candy and popcorn, is purchased at a supermarket, DO something with the stores, sell them, put them to better use.

Report this Post Reply

Avatar equalfuture (93.16) Submitted: 4/09/08 5:52 PM

Recs: 0 | Rec This

GOOD WRITE UP, i guess i am a little more sensitive, i also had a run in with a block buster employee, she actually was some sort of manager, straight out of a trailer park, with a mouth and personalitynot even found in a coal mine, but regardless, i think the brick and mortar stores are going to be a big problem, talk about a gorrilla on your back.
brick and mortar stores can and do help many online businesses, but not in this case and with this product, when buying a shirt, jeans or shoes, i and many people want to try on several models, for fit and comfort etc. when renting a dvd i want to read the cover or see the stars, i can do this just as well online as in a store, candy and popcorn, is purchased at a supermarket, DO something with the stores, sell them, put them to better use.

Report this Post Reply

Avatar equalfuture (93.16) Submitted: 4/09/08 5:53 PM

Recs: 0 | Rec This

GOOD WRITE UP, i guess i am a little more sensitive, i also had a run in with a block buster employee, she actually was some sort of manager, straight out of a trailer park, with a mouth and personalitynot even found in a coal mine, but regardless, i think the brick and mortar stores are going to be a big problem, talk about a gorrilla on your back.
brick and mortar stores can and do help many online businesses, but not in this case and with this product, when buying a shirt, jeans or shoes, i and many people want to try on several models, for fit and comfort etc. when renting a dvd i want to read the cover or see the stars, i can do this just as well online as in a store, candy and popcorn, is purchased at a supermarket, DO something with the stores, sell them, put them to better use.

Report this Post Reply

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