<<While, it is true that NFLX generated a "profit" in the 2nd Quarter, NFLX, also, changed the way it depreciates its DVD library.>>
Dave,
Agreed. My general point, though, is that these guys are doing OK in the face of a highly-competitive environment and should do better now that the competitive climate has eased. Walmart's out, Amazon's still not in (and if it ever enters it will likely be via partnership with Blockbuster), and online pricing will likely increase soon. At this point, the following scenario is likely: (1) Blockbuster raises prices to $17.99/month, (2) Netflix follows suit by raising its own prices, to perhaps $19.99/month. Under this scenario, Blockbuster would win big, as it would improve its cash flow and profitability while remaining the low-cost provider.
The real story here, however, is Netflix's slowing growth. As I predicted from the beginning, it was just a matter of time before the tide shifted in Blockbuster's favor. Blockbuster has weathered the storm (although my guess is that Q2 will not be good), and things will improve from here. In the past few weeks, Blockbuster has begun the process of integrating in-store with online by leveraging in-store, in-stock inventory to fulfill online orders. Leveraging in-store inventory will not only help Blockbuster save money but it will also pretty much guarantee next day online delivery to just about anywhere.
What are your general thoughts about this release? Are you concerned with the growth numbers, or is it just me?
By the way, have you used your free month of Blockbuster yet? |
