Blockbuster recently made a strategic move that changes the landscape of the rentable entertainment market as we know it: they decided to link their online and in store offerings into a single membership that allows members to use both channels on the same membership, whenever they feel like it.
Called Total Access, the new program allows members to browse the store for movies and order hard-to-find titles on line. They can return videos through the mail or exchange them for new ones in the store. And they receive on line promotions they can redeem in their local store for additional movie and game options. The result makes it very difficult for the competition: on line competitors like Netflix have no answer to Blockbuster's nationwide network of 5,000 stores; and the only viable store competitor, the combined Hollywood/Movie Gallery chain, has less than 3,000 stores and no chance of raising the billion dollars needed to compete on line.
The result is a confused business climate in an already shrinking market. Netflix stock is declining and Movie Gallery's stock was close to being delisted when it took a sudden and mysterious spike up, fueling a rumor of a possible joint venture or even merger between Netflix and Movie Gallery. It's really the only logical way the two companies can compete against the Blockbuster juggernaut.
Confusing the picture further is the looming shadow of downloadable movies in the not-too-distant future, a game in which all three companies hope to play but in which only Blockbuster has the experience and the capital to compete against other media outlets, which may include the studios themselves or, at least, the major media conglomerates.
In the end, those who innovate in ways that are most relevant to the customer are those who will survive. And it's a great time to be a movie fan. Not only is Hollywood making more movies than ever, but when you have more than 60,000 movies to select at Blockbuster Online, it's hard to complain that there's nothing to watch.
