Saturday, January 13, 2007

BBI (Blockbuster): The Old Champ Throws a Left Uppercut to Deliver the Knock-Out Blow

Netflix had a great run. They revolutionized the whole Movie Rental Business. And for a long time, they were beating the crap out of the champ, Blockbuster. But the champ started fighting back. They opened their own online business and ended the Netflix's monopoly over the straight to your door subscription service. And now, they have done something that Netflix can't. We now can trade in our DVDs at their physical locations.

I saw the new ads for Blockbuster's Total Access last Thursday night when I was watching Grey's Anatomy (Ya, that's right, I watch Grey's... Shut up already). Within the first 7 seconds, the ad reminds you of NetFlix is (trading jabs) and then reminds you of the two day wait you have to endure before you get your next DVD (a fierce right hook) and then finishes with that you now don' t have to wait anymore because you can now return your latest DVD at their brick and mortar stores and pick up your next one immediately (The devastating left upper-cut to the glass jaw of Netflix). The moment after the ad finished, I was online cancelling my Netflix membership and signing up on Blockbuster.com.

The biggest play here is not the store trade-ins or the instant gratification (Okay maybe it is, but indulge me as I try to sound poetic... Sheeesh!). But for me, It's about having choices. With the Netflix model, you were forced into a system where you had to wait. It was great but this is better. I don't have time to watch DVDs everyday but when I find myself with some time to kill, it's wonderful that I now have the ability to walk into a store and get the instant gratification that I never had with Netflix. Before, in order to watch movies on the weekend, I had to time when I sent in my previously viewed DVD so that I could get in on Saturday. But even that wasn't guaranteed.

In any case, the CEO of Blockbuster, John Antioco, should be given the medal of honor or at least a congratulatory gift certificate to Chuck-E-Cheese (That silly rat always brings a smile to my face) for having the balls to go through with this. I know all too many so called "leaders" that wouldn't.

Right now, Netflix (NFLX) is at $22.71 and Blockbuster (BBI) is at $6.43. Before Netflix came around BBI was a consistently around the 20-25 range. I don't know about you all, but I see a switch-a-roo about to happen. But as always, we'll see.

Oh and by the way, Blockbuster CEO John Antioco recently purchased 220,000 shares, bringing his stake in the company to 1.1 million shares.



Notes:
In Portfolio: I love the smell of freshly minted shares
Duration: Maybe a year of so... We'll see
Word of the Day: scrumtulescent - More than delightful; More than brilliant; A made-up adjective used when no word can describe the perfection of something.