Blockbuster To Waste $15-20 Million On TV Ads

Bankrupt relic of a bygone time, Blockbuster Video, announced plans yesterday to launch its first national TV ad campaign since 2007 and that they plan on somehow taking aim at Redbox and Netflix.

After Blockbuster filed for bankruptcy in late September, it received $125 million in funding to stay afloat. Now the company says it will spend $15-20 million of that on an ad campaign.

From Reuters:

The goal of the campaign is to increase awareness in the fact that Blockbuster rents new releases 28 days before Netflix and Redbox, a unit of Coinstar, Blockbuster said.

For much of the past year, Blockbuster has tried to make a big deal about having many new, hit (dare we say “blockbuster”) DVDs for rental 28 days before Netflix. However, Netflix has continued to stress that it’s main goal is making its selection of streaming videos more robust, rather than just offering the most recent releases.

And then there’s the bigger concern with Blockbuster — Would you want to sign up for a membership with a company that has already declared bankruptcy when there are other services that are getting stronger?

Blockbuster kicking off TV ad campaign [Reuters]

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  1. RyGuy1152 says:

    Block who?

  2. Nessiah says:

    I’ll save everyone the typing…

    Dropped Blockbuster a long time ago to get Netflix because its cheaper, offers more content, and is just awesome overall.

    /end

    • Milch says:

      I dropped BB after getting a $30 late fee for a LotR movie when their shelves were full. Told the manager I would pay the cost of purchasing the movie new and walk happy with it in my hand but they wouldnt allow it. Payed the fee and they have not seen a cent from me since.

      • Nessiah says:

        lol…no more late fees indeed

      • XTC46 says:

        It doesnt work that way. BB pays more per copy as they intend on renting them out. The average cost per copy to rent out was something like $150. They cant just grab a copy from a new package and put it up for rent. (I worked at blockbuster and we asked this crap all the time and actually had access to the prices to order more copies when necessary)

        • sonneillon says:

          Sort of. That’s cooky corporate accounting where they buy movies from themselves. First sale doctrine means that Blockbuster, Netflix, Redbox can buy movies from wherever they want usually a wholesaler and they get a discount for bulk buying.

          For more information
          http://arstechnica.com/tech-policy/news/2008/10/universal-studios-attacks-dvd-rental-kiosks.ars

          • tungstencoil says:

            They’re referring to VHS days (at least, for the $150 stuff). It’s not wonky accounting, it was a fact of the VHS days. Most (but not all) movies were released for rental-only at first, with ridiculous shelf prices of $150. This was how studios “made up” for the lost sales revenue that rentals represented. Once the movie had been out for a few months, it would get released at sell-thru pricing.

            When DVDs came out, they were (1) waaaay cheaper to manufacture (on the order of pennies instead of around a buck), and (2) they had incentive to get people to purchase DVD players (higher profits for the studios because they could sell either a DVD or VHS for around $15/$20 but it only costs pennies to manufacture). This also gave incentive to the rental companies to adopt the new technology.

            Now? People still buy DVDs (not sure why, personally), and competition has pretty much rendered the days of $150 for a new release obsolete.

      • Griking says:

        Well, if you were legitimately late in returning it then why are you angry at them?

        But I agree, I also never cared for Blockbuster.

  3. xnihilx says:

    Why can’t they just roll over and die already?

  4. KyleOrton says:

    Dear potential customers. We realized that you prefer the value, selection and convenience of some competitors so we signed agreements with our suppliers that weaken our competitors. I assure you that we have added no value to our services.

  5. JonThomasDesigns says:

    Vote me Pro blockerbuster .. I am a member of both for many many years , BB gets pretty much all new Blu Rays the day they come out , no wait , and some older titles the day they come out .. Netflix wants to shove streaming down everyone throats and they are not getting any Blu rays ..

    • J-Purchase says:

      Netflix has plenty of Blu-Ray movies and if you don’t like streaming, then don’t stream.

      That’s kind of like living in Canada and complaining that your car has air conditioning.

    • theduckay says:

      except most people WANT streaming and probably don’t have a Blu Ray player.

    • pecan 3.14159265 says:

      Netflix is only doing what people want – a lot of people want streaming. It’s not Netflix’s fault that you don’t acknowledge that physical media is overrated.

      • Gamereviewgod says:

        Those of us who don’t want streaming like to have rights to our physical content. The right to resell it, lend it to a friend, use when it want, better audio/video, not have to worry about DRM authentication, and not have to worry about the content going offline at some point.

        Someday, Netflix won’t have streaming because *gasp* the studios don’t need Netflix. What happens when each studio stops giving them content and sells it to you on their own at some inflated price? That’s what we’re headed towards as streaming and digital content takes over. No thank you. I’ll take physical media, a disc that I own and can do whatever I want with.

        • pecan 3.14159265 says:

          You really think the studios are going to have a monopoly on their content? Amazon already rents and sells digital media. So does iTunes. Unless everyone else goes out of business too, I think the market is safe.

          • Gamereviewgod says:

            It’s what they want. Warner already does it with the Warner Archive. You can only order those films directly from them as a download or a pressed DVD. No Netflix streaming, no rentals, no Amazon Gold Box deals. With digital media, you don’t need an additional outlet(s). It’s meaningless to the studios, and only cuts into their profits.

    • George4478 says:

      >>Netflix wants to shove streaming down everyone throats

      Good point. The other day I was watching a DVD I got from Netflix when the door was kicked in. It was the Netflix Gonna-Force-Streaming-Down-Your-Throat home invasion team. They smashed my DVD player and tased my wife until I added 10 ‘Watch Instantly’ titles to my queue.

      I’ll never watch one of their hundreds of thousands of DVD releases ever again.

      • pecan 3.14159265 says:

        It was the Netflix Gonna-Force-Streaming-Down-Your-Throat home invasion team.

        Is that more like the evil vegan from Scott Pilgrim or more like a group of Kool-Aid guys?

    • sagodjur says:

      Yeah, all the Blu-ray adopters weren’t looking ahead far enough. They had to buy into the new format. “The audio and video quality is so awesome!” The problem is that physical media is going the way of the dinosaurs (Blockbusterasaurus for instance).

      The 21st century would like to introduce you to HD streaming video if only the physical media fetishists would give up the addiction to shiny discs and quit dragging the rest of us back into the past. The media companies wouldn’t sell physical discs if customers just stopped buying them (theoretically).

    • bsh0544 says:

      You mean except for those blu-ray movies that Netflix has?

    • TheGreySpectre says:

      I have not had any problem with getting blu rays from netflix

  6. kriswone says:

    I find this in every way wrong. Lackluster never should have been bailed out, I don’t care how bad the economy would have been if they went under. NO MERCY.

    • dangerp says:

      Um, they weren’t bailed out… You seem to have your current events confused. The banks and GM were bailed out. Blockbuster was allowed by a court to get a loan from private investors and hedge funds.

      Or maybe that was trolling. In light of the fact you copied your reply from the GM thread, I would put my money on trolling… and it worked.

      • hansolo247 says:

        And whoever gave blockbuster the money is really “hedging” their bets!!

        All in all, the smart money says this company is going to fail. There’s a small chance it’ll succeed, but very very small.

        I think hedge funds should use a different name…as they don’t technically hedge very much:)

      • Awesome McAwesomeness says:

        Yes, and TARP is actually turning a profit for tax payers now, while Blockbuster never will.

  7. Rocket says:

    We not BlockBuster, we BlockBlister. We better; MUCH BETTER!

  8. Taliskan says:

    Is that some Ski-free in that chart I see?

  9. Sajanas says:

    I wonder if those 28 day waits will last after Blockbuster is dead. I know they want to sell more DVDs too, but I imagined their relationship with Blockbuster was another big factor.

  10. UltimateOutsider says:

    I don’t want Blockbuster to go out of business because Netflix’s streaming offerings for children of my kids’ age are very limited and we use our queues for grown-up stuff. They really need to focus on their month advantage for new releases in their advertising, but I wonder how they are going to address the fact that they have late fees again (even though they refuse to call them that). The last Blockbuster commercial I ever saw was about how there were no more fees. I wonder how many former/potential customers still think that’s the case?

    • lettucefactory says:

      While I am no fan of BB, I’m totally with you on the children’s releases and streaming. Needs some work.

      In fact, I went back to cable (well, Dish network) because I couldn’t find a good variety of kids stuff with the Netflix/internet/hulu combination we’d been using before our son got old enough to watch tv.

  11. Coelacanth says:

    With net-neutrality in jeopardy, who knows – maybe there will be market for Blockbuster once more!

    • Ecks says:

      With what’s going on in Canada, you’re probably right. Sure, we just got Netflix, but if the ISP’s trottle the traffic, what good is it? (Not saying they throttle Netflix, but they throttle a lot of other things.)

    • NeverLetMeDown says:

      What’s going on in Canada has nothing to do with net neutrality. Putting bandwidth caps in place, or throttling heavy users, is 100% compliant with net neutrality. It only becomes an issue if you start throttlling or capping based on type of content or content provider.

  12. eekfuh says:

    Best graphic ever. SkiFree > blockbuster.

  13. GregD says:

    I’m not sure why you consider providing a convenient and popular service like streaming shoving it down everyone’s throats.I personally stream more on Netflix than watch DVDs, but the fact that it is available doesn’t take anything away from your membership if you don’t want to use streaming. The only downside to Netflix is not being able to get a movie spur of the moment that isn’t streaming, and you can just do Redbox for that.

  14. DanRydell says:

    Advertising is not a waste of money if it’s effective…

    • vastrightwing says:

      And by “effective” do you mean, it will earn back its cost and then make more money for BB? If all BB’s message is, come back to us because we negotiated a deal with Big Content so you get the latest movies 28 earlier than NetFlix and RedBox, you are making an assumption that NetFlix users and RedBox users care about early releases. I say not enough do. If, on the other had, BB can also say, not only do we have DVDs 28 days earlier, but you can also steam these releases too, then… OK, they have a winner. I would not bet $15million that people will spend more than $1.00 to watch a movie 28 days early. Speaking for myself, waiting 28 days to save $3-4 is well worth it. There’s plenty of good stuff to watch before I have to resort to over paying for content.

    • dolemite says:

      “We are working hard and spending lots of money so you get less value from our competitors!”

      Sorry, it just doesn’t work for me. If you spend that money to innovate and come up with things the competitors don’t offer, I might give you some business. To work out shady deals with companies that limit competition in exchange for $…no, that isn’t going to make me frequent you.

      BB would earn my business if they could stream content well, and offer game rentals through the mail (or maybe even game rentals through streaming). But since they suck and can’t innovate, they try and stifle Netflix with back alley deals with WB, etc.

  15. Applekid ┬──┬ ノ( ゜-゜ノ) says:

    This reminds me of Married… With Children and 976-SHOE. Al borrows $50,000 to start his shoe hotline. Steve, who works at a bank holding a contest for the banker that signs the most loans, grants him one even though it’s a terrible idea… and he will lose his job if the Bundy loan faults. Marcy then approves Al for a $50,000 loan to pay back Steve’s loan since she can float a bad one. But, instead, Al uses the second loan for more advertising.

    “We’re not going down $50,000 in the hole, we’re going down $100,000 in the hole!”

  16. Oranges w/ Cheese says:

    My problem with Blockbuster has, and will continue to be the fact that they ONLY RENT new releases. So they rarely, if ever, get any of my business.

  17. PLATTWORX says:

    As with Circuit City, upper management teams who are such idiots they run a company right into the ground (ie: firing all experienced and higher paid employees leaving low paid rookies on staff to trash customer service) they should be personally liable for the damage they do.

    Blockbuster’s CEO, etc clearly have no idea how to rescue the company.. and are blowing investors money.

  18. Oranges w/ Cheese says:

    So if they get 28 days later, 28 days earlier than netflix and redbox does it cause a giant universe destroying explosion?

  19. A.Mercer says:

    Sounds like someone is trying to move assets from one company to another in the way of purchasing completely useless services. It would be interesting to see if there is any overlap between the people in Blockbuster who made this decision and the company they are paying to put together the commercials or the broadcasting companies that will be paid to air them.

  20. Clutchcargo says:

    Comcast is going through this now.
    To Blockbuster… Treat your customers like crap by gouging ($60 late fee), late to market with DVDs through the mail, not in market with streaming, and surprised when everyone jumps off your sinking ship.
    I love it when a redbox sits next to your now empty stores.

  21. hotcocoa says:

    I’ve had BBuster’s mail service (on and off) since college when it first came out. It’s gotten sooo crappy throughout the years with all their cutbacks and changes and price hikess. Plus, their customer “service” is appalling. When they finally go kaput and the way of the dinosaurs, I will not miss them. Even their BBX kiosks suck hardcore. They’re usually indoors, broken, or having errors of some sort. They just can’t get their shyt together with anything. Adios, Blockbuster! Your time has come.

    • hansolo247 says:

      Those kiosks are not Blockbuster.

      It’s NCR. Blockbuster gets a mere sliver…way less than if they would have just bought the machines and fielded them.

      Ah, but that requires access to capital, and BB didn’t have that.

  22. Macgyver says:

    They filed for bankruptcy, who the hell gave them $125 million. That doesn’t make no kind of sense.

    • NeverLetMeDown says:

      Um, yes, it does. DIP financing is extraordinarily common. The people who lent them the $125MM are first in line for getting paid, before the bondholders, and before the stockholders.

      • hansolo247 says:

        Not sure that is the case.

        They take ownership, yes, but you can’t shortcut payroll and secured creditors just by providing DIP financing. DIP financing is provided as they become the new “owners” once the company has reorganized.

        Well, unless you’re Obama.

  23. lettucefactory says:

    I never tire of that beautifully illustrated graph. Seriously. That little skiier cracks me up.

  24. evilcharity says:

    What the movie production houses and Blockbuster fail to understand is that I’m willing to wait a lot longer than 28 days to watch a new DVD release. Heck, for many titles I’d be willing to wait an indefinite amount of time. I’ve recently started my love affair with Netflix streaming; we are quite happy together.

  25. Silverhawk says:

    Part of me would really like to see BB die already, but go ahead and let the morons waste their investors’ money. That way Netflix at least has some competition.

  26. Hank Scorpio says:

    I don’t get the whole “we’ve got it 28 days before Netflix or Redbox” marketing ploy (Comcast says the same thing about their OnDemand service). If I didn’t see it in the theater, and waited this long to see it, I think I can wait another 28 days.

    I threw away my Blockbuster card years ago. I was sick of their scratched-up DVDs and lousy customer service long before Netflix came around.

  27. Southern says:

    I would much rather have new releases on a streaming format than a physical format, even if I have to wait an extra month for them.. However, Netflix STILL doesn’t get that many new releases in a streaming format, and I really couldn’t care less about “older” movies.. Chances are if it was worth seeing, I’ve either already seen it, or I own it. Movies I don’t own are typically those I only felt were watching 1 time anyway.

  28. louiedog says:

    I recently moved into a new place and just two blocks away there is an empty building that was a Blockbuster before I moved in. I can honestly say I probably would have never gone inside. In my old neighborhood there was a Blockbuster that was very convenient to me, but it took me a few weeks to notice when it shut down. I know the stores exist. I know what they offer. Advertising isn’t going to get people like me in. We don’t want that anymore.

    If they offered what Netflix does as well as Netflix does it, I’d consider them for my movie needs. They don’t.

  29. nbs2 says:

    Not sure how the signing up portion is a major issue. If BB goes away completely, you move on/back to Netflix. It isn’t like you prepay a year in advance.

    Of course, I’m probably never going to give up on Netflix (I still feel dirty for having compared the Blockbuster service when it was launched).

  30. Remmy75 says:

    I do believe it might take me 28 days to find the nearest Blockbuster. I haven’t seen one of thier brick and mortar stores in years.

    I think what BB and Studios fail to realize is that people would be willing to wait longer if it means more streaming content.

  31. LightningUsagi says:

    …and most people won’t see the ads because they’re watching streaming video from Netflix or rented videos from RedBox.

  32. HogwartsProfessor says:

    There’s still a BB store fairly close to me, and I use it occasionally. I also have a Redbox at the gas station four blocks away. If they close the BB I’ll just go to Family Video. I enjoy walking around and browsing for a movie sometimes, not necessarily a new release.

    I love my Netflix, but they need more good (old) stuff on streaming.

  33. MB17 says:

    Dear Blockbuster,

    The free market has spoken. It tires of your old, inferior business model. Please die a quiet death.

    Regards,

    America

  34. Duckula22 says:

    I will wait 28 days.

  35. steveliv says:

    Pro Blockbuster here…I’m signed up on their Total Access plan. For $7.99 a month i get the following;

    (1) Free Game/Bluray Rental Coupon In Store
    (2) Bluray/Game Rentals Online
    (2) Bluray Rentals (or $4 Video Game Rental) In store (These are attached to my online plan so i can keep the game or bluray for as long as i want)

    It matches our needs exactly. We tivo/bittorrent all of our favorite shows so netflix streaming doesn’t interest us.

  36. yellowshirt says:

    blockbuster spend years making me hate them with over the top late fees and poor customer service a few million in ads (that i won’t see because I am netflix streaming) won’t make a difference

  37. Destra says:

    I bet they’d spend more than 15-20mil if they had it…

  38. coren says:

    What kind of ad campaign do you get on tv for 20 million?

    And now Sarah Palin’s Alaska, brought to you by Blockbuster!

  39. ekasbury says:

    Nice dig with the Coinstar comment.

    Anywho, I’m begining to think that Blockbuster assumes that 28 days later the zombies will have eaten all the humans, so your only option if you want to see the movie is to rent it now.

    I have no love for BB, but am also tied to the fact that if I want to pop out and browse a wall of DVDs, they’re pretty much the last game in town anymore (at least where I am). So, it’s nice having them around, even though I snicker at them every time I drive past. It’s just so hard supporting such a dinosaur.

  40. jaredwilliams says:

    And netflix has no late fees. Which blockbuster DID have that policy and dropped it. Fuck you blockbuster, I live literally within walking distance of one of the last blockbusters in new england and i still wont go. Why? because they still charge 6 bucks for a new release and 5 for everything else…when you can pay a dollar for a new release at redbox or go on a plan for new releases with netflix. Does anyone REALLY even notice when new movies come out anymore. I dont I just go to redbox and see “oh shit this is out now”. Haha

  41. CBenji says:

    I don’t hate BB. I did cancel them, but I have a fairly successful one nearby my house. Sometimes if we are hard up we will rent a movie from there, but I normally do the Netflix. In my area BB is pretty popular because there are a lot of old people. I don’t think they can figure out the whole streaming thing. On a Friday night the parking lot of BB is usually pretty busy.

  42. thomas_callahan says:

    Anybody else find themselves replaying the Black Knight scene from Monty Python and the Holy Grail with Blockbuster as the Black Knight and Netflix as Sir Whoever-it-was? Come back here you yellow bastards! I’ll bite your legs off!

  43. Poisson Process says:

    Ski Free! I loved that game in 9th grade. It would fit on a single floppy disk with room to spare! My teacher never understood how it kept appearing on every computer in the lab even after he deleted it.

  44. fuceefacee says:

    Are they still in business?

  45. PennandInk says:

    What’s with the chart? Is that a logarithmic scale? Whatever it is, it’s deceiving.

  46. haggis for the soul says:

    It’s kind of like having a feast and using up all your food the night before bandits attack your village. Way to go.

  47. Skandrannon says:

    If blockbuster wants to compete, they need to drop their damn prices.
    Rent two new releases… congratulations, you just spent more than a months membership to Netflix.

  48. MrHeartOfGold says:

    Its OK, its funded by stimulus…

  49. fuzzymuffins says:

    i made a nostalgic trip to the blockbuster museum last week: http://www.youtube.com/watch?v=3TrPwOrf4sM