Buh-Bye Blockbuster!

LA Times Company Town is reporting that Blockbuster is preparing for a mid-September bankruptcy. 

"Executives from Blockbuster and its senior debt holders last week held meetings with the six major movie studios to discuss their intention to enter a “pre-planned” bankruptcy in mid-September, said several people familiar with the situation who requested anonymity due to the sensitivity of ongoing talks.

Blockbuster is hoping to use its time in Chapter 11 to restructure a crippling debt load of nearly $1 billion and escape leases on 500 or more of it 3,425 stores in the U.S. Maintaining the support of Hollywood's film studios during the process will be critical so that Blockbuster can continue to rely upon an uninterrupted supply of new DVDs.

Blockbuster has lost a total of $1.1 billion since the beginning of 2008 and has been severely hamstrung in efforts to grow its business due to interest payments on $920 million in debt. Earlier this month the company announced that most of its debt holders had agreed to a forbearance on interest payments until Sept. 30, during which time it would attempt a recapitalization."

Not exactly sure what to say about this except that it's an end to an era.

RedBox To Destroy Entertainment Industry?

Read the report here. (PDF)

I have read this backward and forward and am having a tough time with some of the conclusions they come to, and some of the assumptions they make that flies in the face of other evidence that's out there.

(Granted some of that evidence is anecdotal)

The report is designed from the ground up to determine economic impact on SoCal, but unfortunately doesn't paint a clear picture because it uses words like "unpredictability" in making some of its statements, and castigates RedBox while acknowledging that Netflix performs a similar function.

So is it Redbox with it's cheaper rentals that's hurting the entertainment industry or is it a fundamental shift in consumer spending and habits and a lack of responsiveness on the part of the studios in forging new markets?

Paula Wagner had this to say over at Variety .

As an indie producer, Wagner said she's very focused on finding the best way to deal with the exponential growth in distribution options for pics.

"The real issue now is distribution channels," she said. "We need to know what size screen we're working for."

The movie biz has always faced dynamic changes - from the dawn of talkies to the 1948 breakup of the majors and their exhibition holdings - but the transformation underway in the present day are staggering, Wagner said.

"We are in a seismic revolution in the movie business," she said. But the good news is, as domestic B.O. approaches the $10 billion mark, the aud's appetite for movies shows no sign of slowing down.

DVDs, Hollywood’s Profit Source, Are Sagging...

According to The New York Times anyway.

Hollywood in their infinite wisdom is banking that Blu-Ray is going to pull profits back up, but I am not as optimistic as they are in this regard. In a slow economy I think this would have been a safe bet, but in today's economy where heads are sitting on financial pikes I think people will go even cheaper with their entertainment. They'll hold onto their DVRs, their internet, their X-Boxes, and their books. They won't purchase relatively new BluRay players.

I hope I'm wrong, but...

There's a lot of problems with DVD right now, not the least of which is everyone's seemingly abandoning it for Blu Ray. Many DVDs just don't look good and don't have real sales value. Of course, that's always been a problem... how do we communicate what this movie is and motivate people to buy it with just one image and a title?

-------------------------

Other stuff of note:

In an interesting bit of business, Image Entertainment has been purchased by Nyx Acquisitions.
A Home Entertainment company purchased by a financier designed to converge the digital.

I have been groin-deep in contracts for something I am hatching that qualifies as "pulp for the new media". In unrelated matters, I have to beat up a few people to get them off their high horse and onto the web with their movies. They have some pulpy movies and other projects sitting on the shelf, and they don't want to serialize them on the web because they haven't closed a DVD deal. I hate to tell them they aren't going to close a deal and they need to move now.

(Shakes head)
Silly creatures these humans.