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Studios make Blockbuster pay for DVD releases up front (AND in cash)

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Studios make Blockbuster pay for DVD releases up front (AND in cash)

Old 09-06-05, 03:01 PM
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Studios make Blockbuster pay for DVD releases up front (AND in cash)

From imdb:

Studios Act To Protect Big Green from Big Blue

Concerned about Blockbuster Video's financial state, some Hollywood studios are taking steps to ensure that the chain pays them for DVD releases this fall, Daily Variety reported today (Tuesday), citing no sources. The trade paper said that one studio successfully demanded last Thursday that Blockbuster pay cash for DVDs up front before the studio would ship them. At least two other studios have taken out insurance for receivables to protect themselves against delays in payments from Blockbuster, Variety said.
Old 09-06-05, 03:04 PM
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So...expect higher rental fees for consumers.

Pro-B
Old 09-06-05, 03:10 PM
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Originally Posted by pro-bassoonist
So...expect higher rental fees for consumers.

Pro-B
My Blockbuster already went up from $4.20 to $4.50 two weeks ago.
Old 09-06-05, 03:45 PM
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So could this mean the end of BBV is even more imminent than we thought?



Seriously, I recall online stores like DVDexpress.com that had to do this kind of thing in the past, and those online stores were gone very soon after this happened.
Old 09-06-05, 03:47 PM
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Ugh. Imagine the used DVD sale threads if that happened? This forum would be in chaos.
Old 09-06-05, 04:57 PM
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Pretty soon you'll be able to buy a DVD for less than it costs to rent at Blockbuster. (You already can now whenever Gamestop is running the the "2 for $10" and B2G1 Free promotions).
Old 09-06-05, 05:47 PM
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Don't forget about the Netflix effect. I imagine they are taking customers from BBV as well. Heck, if I was into renting as opposed to buying I would either Netflix it or VOD/PPV. No way in hell would I drive to BBV and put up with their crap anymore. All the BBV stores in my town are owned by 1 person and they never do the corporate deals....i.e. no late fees, etc and very few good sales.
Old 09-06-05, 06:02 PM
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Originally Posted by calhoun07
So could this mean the end of BBV is even more imminent than we thought?



Seriously, I recall online stores like DVDexpress.com that had to do this kind of thing in the past, and those online stores were gone very soon after this happened.
On-line stores were fly-by-night compared to Blockbuster. Blockbuster would run in bankruptcy for a while before it actually failed.
Old 09-06-05, 06:07 PM
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I wonder how the Hollywood Video and Movie Gallery chains are doing these days?
Old 09-06-05, 06:26 PM
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A few years ago the demise of Tower Records was seen as iminent - several labels were refusing to ship CDs to them without money up front. But they are still in business ... so don't count BBV out yet.
Old 09-06-05, 07:01 PM
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But Tower Records is a good company and cares about what they sell- Blockbuster is not/does not.
Old 09-06-05, 07:31 PM
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Maybe BB will get rid of all B&M stores and simply go online...? GameRush was a failure (Lots of money lost, and their deals were WAY to good to be true, therefore they got raped).
Old 09-06-05, 08:09 PM
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"citing no sources"

c'mon now..... if this wasn't about BBV ya'll would demand proof
Old 09-06-05, 08:10 PM
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I enjoy strolling around a Blockbuster, but a Barnes and Noble to their Borders would be nice. Netflix has really stolen me away from Blockbuster. That and Blockbuster's weird policy of refusing to carry unrated versions of mainstream films (like Team America) while stocking their shelves with unrated soft-core straight to video porn.
Old 09-06-05, 10:26 PM
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Originally Posted by boss429
My Blockbuster already went up from $4.20 to $4.50 two weeks ago.

There is a store very close to where I live that I am told began charging 4.75$. I don't quite understand how you could have a different price at two chain-stores within the same city but that is another question (not that it is impossible...I don't understand how Blockbuster does it). With this said I would like to point out two things:

1. I won't feel sorry if they go away. Their utterly conservative policy (and I mean it in a bad, restrictive, manner) has destroyed anyone that was attempting to survive in my area. The only two independent stores are in a radius of about 9-10 miles and both survive primarily due to their porn selections. I spoke with one of the owners and she basically told me that people come here to rent porn...not "films". They do get the typical Hollywood releases but that's about it, no foreign, no anime, no older classics...nada.

2. The only way they, Blockbuster, will survive the competition is if they readjust their policy (read: unrated, adult-X, niche product is welcome at their stores)....which I don't see happening at least in the suburbs of Chicago (my area) so....something shall happen. I don't know what but the market will soon tell.

Ciao,
Pro-B

Last edited by pro-bassoonist; 09-06-05 at 10:29 PM.
Old 09-06-05, 10:55 PM
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Originally Posted by lamphorn
That and Blockbuster's weird policy of refusing to carry unrated versions of mainstream films (like Team America) while stocking their shelves with unrated soft-core straight to video porn.
Your local Blockbuster's policy, apparently. All the ones in my neighborhood have plenty of unrated versions of mainstream films (including Team America's unrated version). And I live in the same town as the Blockbuster corporate HQ, so I assume there's no corporate rule against carrying such titles.
Old 09-07-05, 11:51 AM
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If Blockbuster went away, I'm honestly not even sure I'd notice.
Old 09-07-05, 12:31 PM
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Originally Posted by MEJHarrison
If Blockbuster went away, I'm honestly not even sure I'd notice.
On the contrary, here in NYC they're really the only place to rent from. We only have a couple of Hollywood videos that I can even think of. If they go under, I'm fucked.
Old 09-07-05, 01:49 PM
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I really wish there was the option for $0.99 24-hour rentals on any title. I really don't like this, $4.75 9-14day rental thing. I would rent a lot more on a $0.99 plan.

Jon
Old 09-07-05, 03:44 PM
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Originally Posted by Alan Smithee
But Tower Records is a good company and cares about what they sell- Blockbuster is not/does not.
Which Tower is this? I've lived in 3 states, and every Tower is the exact opposite of what you describe.
Old 09-07-05, 03:45 PM
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Originally Posted by daddydaryl
"citing no sources"

c'mon now..... if this wasn't about BBV ya'll would demand proof
Video Business Magazine is reporting the same. Paul Sweeting wrote the article.

Big Blue has cash blues
Nixes quarterly dividend, makes credit deals with studios
By Paul Sweeting 9/2/2005

SEPT. 2 | Blockbuster announced Friday that it won’t pay a shareholder dividend for the third quarter, marking the first time since it went public in 1999 the retailer has skipped the cash payment.

Its board determined that “at this time, it is more important to use the cash … for the business,” the company said.

The news sent shares of Blockbuster down sharply in early trading and renewed focus on the rental giant’s cash flow, which has plummeted since Blockbuster eliminated late fees at the beginning of the year.

Click here!
Over the past few weeks, the chain has appealed to studio suppliers for extended payment terms as it looks to load up on product for the fourth quarter, according to studio sources. In some cases, such as with Paramount Home Entertainment’s The Longest Yard, specific deals have had to be worked out before the studio would ship the title to Blockbuster. That title has now shipped.

The chain also recently stepped up its revenue sharing with various studios to reduce strain on cash flow.

Big Blue obtained about 70% of its rental DVDs via rev-share in the second quarter, according to a knowledgeable source. That compares to its typical quarterly average of about 50%.

Although studio sources say they are monitoring Blockbuster’s outstanding payables closely, the situation is not considered critical.

“They have the cash, but they have a lot of uses for their cash right now,” independent equity analyst Dennis McAlpine said.

Studio sources said it appeared Blockbuster was trying to conserve as much cash as possible to bolster its fourth-quarter earnings.

“They are not in imminent danger,” a senior studio exec said. “They are just using the situation to manipulate vendors.”

Last month, the chain reported a loss of $57 million for the second quarter and warned investors that the third quarter would be difficult as well. But in comments since then, chairman-CEO John Antioco has vowed Blockbuster will be back in the black in the fourth quarter.

A Blockbuster spokeswoman said skipping the third-quarter dividend would save about $3.6 million.

Still, some suppliers are starting to hedge their bets by insuring their fourth-quarter receivables against possible delays in payment by Blockbuster. Others expressed sympathy for the retailer’s position, however.

“This has happened with Wal-Mart and other accounts,” one supplier said. “I think people are blowing it out of proportion.”

An exec at an independent supplier blamed any problems at Blockbuster on the state of the industry in general.

“We’re very much aware that there is an issue here,” the indie exec said. “I’ve been explaining to the credit department that it’s soft at the box office, soft on the street, soft on sell-through and rental. No one is immune. It’s not just Blockbuster.”

Blockbuster’s cash problems began with its strategic decision to eliminate late fees. The No Late Fees program, aimed at stimulating rental growth, has cost the chain an estimated $400 million in revenue and $250 million to $300 million in operating cash flow this year.

The company claims the move will eventually boost overall rental transactions to where their revenue will eventually exceed what it was before it eliminated the fees. But in the short term, the strategy has taxed Blockbuster’s inventory, requiring deeper buys and further stretching its financial resources.

Earlier this year, the company was forced to negotiate a waiver of certain cash-flow-to-debt ratio covenants in its credit agreement with its banks.

Without those waivers, it would have been in technical default of those covenants in the second quarter.

Additional reporting by Scott Hettrick and Susanne Ault

E-mail Paul Sweeting
Old 09-07-05, 04:02 PM
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Good. I hope Blockbuster dies a painful death.
Old 09-07-05, 04:07 PM
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Hope this is true, and hope it's the beginning of the end. I mean, Blockbuster's irrelevant to me save the fact that they occupy some prime square footage on the street level of my building, and I really think we could use a good Japanese restaurant there. Or maybe Thai.
Old 09-07-05, 04:12 PM
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I quit going to BBV when they upped it to $3.88 for new releases locally.
Old 09-07-05, 06:27 PM
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Originally Posted by pro-bassoonist
There is a store very close to where I live that I am told began charging 4.75$.
Ridiculous. Why spend $5-ish to rent a movie when you can own it for $15? Overcharging rental fees isn't going to put them back in the black, only drive people to the competition in the cities where there ARE competitors.

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