Renter's Remorse15 Nov, 2005 By: Holly J. Wagner
Well, it's official. As of Monday, it costs more to rent a new release at Blockbuster than to buy a share of the company's stock.
At least if the movie performs badly you can return it to cut your losses. Not so the stock, which seems to cost long-term investors more every day they own it.
There are plenty of theories for why rentals are down: crummy movies, competition from mass and other discount sellers, and competition from technology.
I'm pretty sure downloading episodes of TV hurts rental more than sellthrough because I'm pretty sure that most people who buy full seasons of TV series are devoted fans, while those who rent a disc from a set are often probably just catching an episode they missed. Now that they can do it on an iPod, it seems to be pulling viewers from TV reruns, and I think the same will happen with TV rentals in tech-savvy demographics.
If you don't believe me, check out an article in Ad Age. It says in the week of Oct. 24 — right after episodes of "Lost" and "Desperate Housewives" became available for download to video iPod — the televised reruns lost half their audience. Oddly enough, that article doesn't mention the downloads.
But in Pixar's quarterly call, CEO Steve Jobs said the company had sold 125,000 downloads of Pixar short films which, he quipped, are not susceptible to returns like discs.
Movie Gallery CEO Joe Malugen said in last week's quarterly financial call that free TV programming is better these days and that is competing with rentals. He also said the industry's challenge will be to get lapsed renters back into stores after one disappointing movie after another chased them to other alternatives.
But at least Gallery's stock is holding at the price of a PVT.