Blockbuster: Admission for One? (BBI)

Blockbuster (BBI)

Blockbuster announced yesterday that it has successfully orchestrated new rental distribution deals with 20th Century Fox Home Entertainment and Sony Pictures Home Entertainment. The movie rental giant has watched the landscape of the media rental industry change dramatically over its 25 year existence. It has seen new movie rental business models like Netflix (NFLX: Charts, News, Offers) and iTunes (AAPL: Charts, News, Offers) redefine how people rent media. Blockbuster has done its best to adapt with these new technologies, but some analysts might argue that they have struggled. However, Blockbuster is hoping that its recent agreements with Sony and Fox will help it regain its competitive advantage. What exactly are the details of Blockbuster’s new distribution deals?

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Stock Analysis

The Blockbuster deal will enable the entertainment giant to fast track DVD releases for consumer rental. Blockbuster has secured the rights to rent out DVDs from 20th Century Fox and Sony the same day the movies are released for retail sale. There will no longer be a delay between retail release and rental release for Blockbuster. Blockbuster is even more optimistic about the deal because rivals such as Netflix and Redbox are not privileged to the same “early” rental releases. It hopes to capitalize on its unique positioning with the summer’s upcoming movie releases.

Blockbuster is particularly excited for Fox’s DVD release of Avatar on April 22nd. As of right now, its freshly inked studio deal could lead to exclusive rental rights of one of the highest box-office grossing movies in the world. This kind of exclusivity could spark an upswing in Blockbuster subscribers, especially for its mail-delivery rental service. It seems Blockbuster is working very hard to build its catalogue of exclusive movie rentals, which could help propel it back to the top of the movie rental industry. It is hoping that its exclusive movie list will provide enough of an incentive for renters to switch to its services.

The studio deals seem to be a step in the right direction for Blockbuster. The movie rental giant is focusing on differentiating itself from other rental services by obtaining exclusive rights to movies. However, the question is: how long will it remain exclusive? It seems hard to believe that rivals such as Netflix will not eventually strike similar studio deals. Blockbuster may have leg up on the competition now, but it probably will not last for long. That being said, if Blockbuster can maintain its exclusive rental rights, it may have just found its “movie ticket” back to success.

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