Historic 'Blockbuster' Store Offers Glimpse Of How Movies Were Rented In The Past
Good Friend of Unfair Park "Spectator" forwards along this piece from the Onion News Network, sure to play like a Betamax at Renaissance Tower HQ. It's a look inside the, ahem, Blockbuster Video museum -- "a historically authentic recreation of a video store, a specialty shop where customers exchanged money for the short-term use of videos in an archaic system called renting."
Which totally reminds me: On Thursday, Slate's Farhad Manjoo had a piece about Greg Meyer, the Blockbuster stockholder who, earlier this month, sent an open letter to shareholders urging them to elect him to the board at the May meeting in downtown Dallas that has since been moved to June. In his letter, Meyer, former CEO of DVDXpress, included a 2005 missive to Blockbuster higher-ups in which he pointed to DVD rental kiosks as the future of the company, whose stock was then trading for around $9. (Even after its recent "surge," after trading Friday the stock's back to do 37 whole cents.) Meyer wrote:
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Labor costs can be significantly reduced through the use of Automated DVD rental kiosks which enable customers to rent DVDs 24/7 while at the same time reducing store hours. If store hours were reduced by just 3 hours per day, we estimate that Blockbuster's 6500 stores could achieve over $140 million per year in cost savings. This could be done without diminishing the value proposition to customers. In fact, by having a DVD rental kiosk in its front window, Blockbuster could offer DVD rentals 24/7 and thereby actually increase its topline revenues with a reduced cost base.
Blockbuster didn't listen; along came Redbox; and that was that, as Blockbuster now hopes to get 10,000 kiosks in place by year's end. CEO Jim Keyes doesn't want Meyer on the board, and the proxy fight could get fugly and expensive. The company's definitive proxy statement, submitted to the SEC Friday, contains a detailed date-by-date history of Meyer's attempt to get added to Keyes' slate of board candidates. Concludes Blockbuster, "The Company's financial and legal advisors subsequently determined that Mr. Meyer's proposal was unworkable and incompatible with the Company's ongoing recapitalization efforts."
Manjoo thinks not, especially as Blockbuster attempts to rebrand itself as the only major video-rental outlet with first-28-days-of-release access to titles from such studios as Warner Bros., Sony and 20th Century Fox. Which is nice, says Meyer, a great start. Problem is, Blockbuster's still charging too much and needs to bring its price point down to a Redbox level -- even at, especially at, the remaining stores. Before they become museums.
[Blockbuster] now charges $5 for five nights on all titles, plus $1 for each additional night. That steep price works for new titles that you can't get elsewhere, but it doesn't make any sense for old movies. Meyer proposes that Blockbuster offer older titles for $2 for the first two nights, then $1 for each additional night. This would encourage a lot of second-movie rentals, he says -- a customer walks in to the store because it's the only place to get It's Complicated, but she walks out with Something's Gotta Give, too, because it's just $2 more. Most customers will keep both movies for five nights, Meyer says, in which case Blockbuster earns $5 for Something's Gotta Give -- a very healthy margin for an old title. Some "price-sensitive customers," though, will try to watch both movies in two days in order to avoid late fees. Blockbuster wins this way, too: Now it gets the $5 It's Complicated back after two days instead of five, making it available for someone else.