Wednesday, February 23, 2011



In what appeared to some analysts as yet another step toward the disappearance of the familiar blue façades that have been a part of the U.S. retail scene for the past quarter-century, Blockbuster on Tuesday agreed to sell itself to a so-called stalking horse consortium of its debtholders for $290 million in a deal that would allow the new owners to liquidate the company’s assets. Some 600 Blockbuster stores will be shut down before the end of next week, the new owners said.
Why is this happening you ask.

Digital technologies are rapidly changing the way movies are delivered to consumers. DVD sales are continuing their multi-year decline with no end in sight. Theater attendance is off a whopping 23 percent so far in 2011 compared to the same point one year ago. And not even 3D is saving it, anymore.

Financial and analysts say movie makers and distributors need to keep up with rapidly changing consumer behavior in an era when entertainment is cheap and readily available on the Internet. Many in Hollywood agree, and are working to change. But profitable new ways of doing business have been slow to come, and the consequence could be an industry on the decline in much the same way as music industry was in the 2000s.

"The trends that we see today are similar in many ways, although I don't think we're the same as the music industry," said Mitch Singer, chief technology officer for Sony Pictures Entertainment, a division of Sony Corp. "Revenues are declining, people are finding other ways to access our content," he said.
Attendance at U.S. and Canada theaters so far this year is down to 173 million tickets sold compared to 225 million for the same time period in 2010 -- a decrease of 23 percent, according to tracking firm Box Office.


Worse, consumers bought only $10 billion in home video entertainment products in 2010, compared to $14 billion in 2004 when the DVD market was booming, reports IHS Screen Digest.
If you needed any more evidence of how bad it is out there folks. 23% decline in box office with a 35% decline in DVD sales is something you cant ignore.

The people who "know this business" were unwilling to comment for this blog post.

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