Comments on: How To Save Blockbuster

By: Marc Allan Feldman

Marc Allan Feldman — Thu, 28 Jan 2010 03:58:13 +0000

To save Blockbuster, it needs to leverage its assets to get on top of a whole new business: PC-DVR TV advertising.
Acquire or buy my company Openivo.
Partner with Acer to mass produce small desktop ubuntu computers with TV tuners and HDTV output.
Partner or acquire a top quality DVR software company like SageTV.
Make the computers free-after-rebate. Stream Blockbuster movies and provide great DVR service. Upload the viewing data to central servers in the cloud, and download targeted commercials.
Use the blockbuster stores for distribution, help with set-up, sale of accessories (like a Verizon store).
With a managed network of PC-DVRs, Blockbuster could do for TV advertising what Google does for search ads. TV ads are a 60 Billion dollar business. Just capture a few percent of this and Blockbuster would be a big hit.

By: Davis Freeberg

Davis Freeberg — Thu, 21 Jan 2010 18:56:22 +0000

Like I said the devil is in the details. We don’t know the exact percentage or arrangement of Blockbuster’s relationship with NCR, but certainly there are a couple of ways to look at this. In the case of Redbox, they own and operate the whole shibang, but they also assume risk in doing so. With Blockbuster’s royalty based business, it means that there’s no cost of goods sold associated with it. On Wall St., people pay significantly higher premiums for revenue that is high margin vs. higher revenue that has low margins associated with it. Depending upon what this revenue stream actually looks like, it’s entirely possible that someone would be willing to pay the numbers that I used to own that cash flow. Certainly, when you compare Blockbuster’s current price to sales ratio, this unit is undervalued by being lumped in with their video store business. While it’s possible that nothing may save them, I believe that my plan would be better than continuing with the “cost cutting” measures that clearly aren’t working. In a worst case scenario, they could always invite NCR to participate in the new tracking stock, in exchange for a different arrangement.

By: Mike Stone

Mike Stone — Thu, 21 Jan 2010 17:57:14 +0000

Nice analysis except you assume that BBI has a kiosk business. They do not. NCR owns and operates the Blockbuster Kiosks. In return for leveraging the BBI brand, NCR makes a royalty payment of about 6% of revenue. This is nothing in the grand scheme of things.