What will Blockbuster.com do that HLYW's Reel.com doesn't do? Okay, it is a good deal. If I wanted to buy a movie over the internet, I might not go to Blockbuster.com or Reel.com unless I owned the stock or my home page had an automatic link to their site.
Something to think about:
The future of movie home entertainment will be greatly changed by the a wider bandwidth. Eventually, you will be able to order a movie to be downloaded to your computer just like you can download music over the internet.
If we look at the music industry model, there is still a place for the middle man. LQID, AHWY, etc. offer "secure" downloads of music right to your home. Apparently, at this time, the Music Industry is not interested in owning a LQID or an AHWY nor are they interested in competing with them for the download dollar. Will that change?
If we apply the current music industry's model of internet delivery, to the movie industry then there may still be a future for BBI and HLYW. However, the mom and pop shops may be gone for good. That means more revenue and profits for big chains like BBI, HLYW, etc. unless the distribution channels are changed.
The last time I checked, movies were distributed in this order by these channels:
First -- Movie Theaters
Second -- Video Retail stores (BBI, HLYW, MOVI, VDCT, etc.)
Third -- Pay-per-view television
Fourth -- Pay cable
Fifth -- Basic cable
Sixth -- Network television
Seventh -- Syndicated television
Will this order change after the internet band width increases?
The last time I checked, the video store chains got between 30-80 days (and sometimes 120 days for movies priced to sale instead of rent) before they had any competition from Pay-Per-View and Direct Broadcast Satellite.
Why should the studios continue to provide a Blockbuster.com with a 30, 80 or 120 day advantage over its competition when people prefer the convenience of an internet download?
Currently, the video chains have been able to provide movies for less than what you pay for pay-per-view. Will their cost continue to be higher? I doubt it.
What about the cable companies? Will they become the future parent companies of companies like BBI or will they just replace them?
The most important word in that news release is "broadband." Is BBI desperately seeking a future?
How will the internet affect the long-long-term investor of companies like BBI and HLYW? In other words, knowing what you know today and guessing about tomorrow, could you store your BBI or HLYW stock certificates until 2010 without ever worrying about losing a lot of your original investment?
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