Blockbuster bidding to purchase Circuit City

[limacharliewhiskey]

Not sure if it'll have much impact on the industry, but it is newsworthy. Circuit City is the #2 electronics retailer in the country, and Blockbuster is the #1 video rental leader:

Blockbuster makes a $1.35-billion bid for Circuit City - Los Angeles Times

[iluvalex]

From a consumer's point of view I'm not understanding the business logic here. How will this help me?

[limacharliewhiskey]

Originally Posted by iluvalex

From a consumer's point of view I'm not understanding the business logic here. How will this help me?

Yeah, that's not what I'm sure about either. Circuit City stores have been closing up near me, and have been around the country, as has Movie Gallery/Hollywood Video rental stores, which is considered the #2 rental company.

[Ruined]

This will allow Blockbuster to transition more easily from a retail renting outlet to a retail selling outlet, once downloads become the norm. I think Blockbuster realizes they must diversify their business if they don't want to be closing up shop once download rentals take over.

This also positions Blockbuster able to prevent selling of Netflix-enabled download rental CE devices or vudu download boxes in Circuit City and allows them to push their own Blockbuster download rental CE device exclusively in Circuit City if they decide to make one.

[limacharliewhiskey]

Originally Posted by Ruined

This will allow Blockbuster to transition more easily from a retail renting outlet to a retail selling outlet, once downloads become the norm. I think Blockbuster realizes they must diversify their business if they don't want to be closing up shop once download rentals take over.

This also positions Blockbuster able to prevent selling of Netflix-enabled download rental CE devices or vudu download boxes in Circuit City and allows them to push their own Blockbuster download rental CE device exclusively in Circuit City if they decide to make one.

This does make sense. I also just remembered that Blockbuster does try to sell new DVDs alongside their rentals, but I doubt many people actually purchase new DVDs there. With a Circuit City brand mixed in, this might help DVD sales a little bit.

When I think about it, this does remind me a bit of the lesser-known Gemstar and TV Guide merger, where Gemstar was known for their VCR Plus features to help program VCRs. Of course, VCRs have become mostly obsolete now, so VCR Plus has almost completely disappeared, but TV Guide has somewhat expanded with cable companies (and possibly satellite companies, I'm not sure), making their interactive TV schedules that work in conjunction with DVRs and their time-shifting programming capabilities.

While DVD rentals are unlikely to ever disappear (as the DVD rental target audience is less likely to download movies because of initial hardware costs for any boxes designed for downloads), there might not be much more industry growth for the DVD rental market, so this acquisition by Blockbuster might make sense.

[ganthc]

Co-branding can be a successful tool for keeping both businesses relevant in the upcoming years. It helps with advertising and intermingling of the customer bases. Such a merger would be beneficial for both sides I would think, though probably moreso for CC as it would have retail sales from people going to BB.