Netflix v. Blockbuster: round 1 to Netflix

4 12 2007

Ryan Carrigg, posting on Compete.com, demonstrates how the divergent online strategies being used by Netflix and Blockbuster are paying dividends for the former. Sometimes a picture can tell the story more powerfully than any words can:

netflixvsblockbuster.gif





Blockbuster bags Movielink

10 08 2007

Blockbuster has acuired Movielink LLC, the online movie downloads service established by five major Hollywood studios in 2002. Terms were not disclosed.

The Wall Street Journal claims a source familiar with the deal put the acquisition price tag at “less than $20 million”. paidContent puts it lower still: “we do know that there is a surprisingly low cash amount involved (much lower than WSJ’s)” 

Update 15 Aug 07: According to a filing yesterday with the U.S Securities and Exchange Commission, Blockbuster paid just $6.6 million in an all-cash deal.

Studio founders including Metro-Goldwyn-Mayer Studios, Paramount Pictures, Sony Pictures Entertainment, Universal Studios and Warner Bros. are believed to have lavished $100 million on the service, which failed to capture public imagination as a consequence of its owners’ failure to back it up with significant marketing effort.

The acquisition bolsters Blockbuster’s online video services and will likely put troubled competitor Netflix under even greater pressure.





Netflix disappoints The Street

24 07 2007

Days after Google’s ouch moment which saw it shed 7% of its value, comes news that Netflix has reported its first ever quarterly drop in subscriptions, revenue and profit. Investors weren’t kind in their response and 16.5% has been shed from its stock price, since news emerged of weaker trading conditions.

The source of its malaise, says this report, is beefed-up competition from Blockbuster. Clearly Blockbuster has greater brand recognition, so either Netflix markets its way out of the situation or simplifies its aspirations. But competing with US $170 million of Blockbuster spend is going to be a tall order to pull off; combined with the latter’s advantage of a bricks and mortar presence.

The real KO round begins as both companies start seriously ramping up their digital store offers.