TK's MORNING BUZZ: MGM Flat-Price Flap Finds Retailers Focusing Too Much on Blockbuster and Not on Their Own Businesses4 May, 2001 By: Thomas K. Arnold
From the latest issue of View, the British video trade: "Blockbuster's proposed acquisition of 41 Apollo stores has hit a stumbling block after the Department of Trade and Industry referred the deal to the Competition Committee. Concerns about the planned deal have been raised because of the potential impact it might have on rental competition in the South East."
American retailers who have grown accustomed to losing legal challenges to Blockbuster here in the United States might gaze across the Pond with envious eyes. I can't think of any of Big Blue's domestic acquisitions that provoked a similar response from our own regulatory agencies; had there been one, there's a good chance we wouldn't be where we are today, with Blockbuster dominating the video rental trade and promising (threatening?) to grow mightier as time (and technology) marches on.
And yet has Blockbuster become a whipping boy for all our ills? The recent flap over MGM Home Entertainment's $45 flat VHS price for Hannibal brought all sorts of retailers to the VSDA discussion board and to my own humble e-mail address, complaining that the price is too high "because Blockbuster's getting it for a lot less."
Don't get me wrong -- I believe Blockbuster's aggressive market-share grab has been bad for the video rental business and bad for the consumer, because the chain's competitive tactics have resulted in a lot of independent video stores going out of business and, in some markets, consumers are effectively forced to rent from Blockbuster simply because there's no one else left.
But what difference does it make to retailers what Blockbuster is paying for Hannibal? Yes, it's a valid question, and one that has thus far not been answered. But that's not the real issue here -- the real issue is whether MGM's $45 flat price is better or worse for retailers than the previous copy-depth initiative, Simple Solutions, the studio had been offering.
Overall, I think retailers are focusing far too much on Blockbuster and not on their own businesses. I might get lambasted by some of you for saying this, and I'd be more than happy to print your responses -- and your names and store affiliations, if you'll let me -- next week.
But think about it -- retailer concerns about Blockbuster have all been voiced and expressed, both in the press and in legal documents, and a lot of what I'm hearing lately is simply overkill. Blockbuster is responsible for global warming, Blockbuster is why the Middle East peace process is failing, Blockbuster is killing Social Security, and Blockbuster is behind gang violence and crack cocaine and what have you. Okay, so now I'm the one who's guilty of overkill, but you see how it strains credibility when you go too far.
John Antioco has become an inflated Bogeyman, and that simply isn't right -- nor is it real.
Comments? Contact TK directly at:TKArnold@aol.com