Mike Isaac
September 21, 2011
http://www.wired.com/gadgetlab/2011/09/netflix-alternatives
The curtain hasn't even opened on Netflix's new DVD-by-mail spin-off company Qwikster, and many customers are already walking out.
The company recently revised its quarterly projections of net subscribers to show 1 million fewer customers than it had previously expected. Much to Netflix's chagrin, folks are realizing that the king of mail-away media isn't the only game in town.
We've taken a look at some of Netflix's (and Qwikster's) main competitors, and judged each service accordingly. Do the rest offer enough to stand up to the best?
Netflix/Qwikster
Also known as Netflix: Redux. It's the same service we know and love, only completely different. Faced with massive customer backlash in the wake of a price hike, Netflix split itself into two separate companies this week. The streaming service will retain the Netflix branding while the DVD-by-mail service will be named Qwikster. Netflix CEO Reed Hastings said the split will better serve customers in the long run because each company will be able to better focus on one type of service.
Netflix pioneered the DVD-by-mail service, creating an entire industry where one did not exist previously. But after serious flux in Netflix's new pricing system — which split the streaming and DVD mailing services into two separate plans starting at $8 a month minimum — there's no guarantee the company's customers will continue to stick around.
WIRED: It's been around the longest, and is the most familiar service. Massive offering of physical mail-away media. New game rental service sounds intriguing. Streaming to all iOS devices and Android smartphones.
TIRED: Can you say price increase? We don't like paying more money for the same service, and we're failing to see how splitting the companies in twain is going to benefit consumers. Streaming-only service still lacks selection compared to DVD catalog.
Amazon Prime
Amazon's elite-level service launched in 2005, offering two-day shipping on any of its products to members anywhere in the continental United States and other select countries for a reasonable $80 a year. Originally meant for those who couldn't wait more than 48 hours for their tangible goods, Prime expanded in February to offer instant, streaming movie and TV show access to existing Prime customers at no added cost.
WIRED: Fast shipping on everything Amazon! What other movie service offers that? Lower yearly rate than Netflix and Qwikster. Works with over 100 different web-connected set-top boxes, including the ever-popular Roku.
TIRED: Smaller media selection compared to other existing services. Lacks the DVD rental option that made Netflix famous.
Redbox
Redbox made it possible for legions of supermarket shoppers to pick up a movie on the cheap, without having to make multiple stops. Instead of leaving the grocery store (or 7-11, Walgreens or what have you) with only a TV dinner and a Mountain Dew in tow, Redbox's 30,000-plus DVD-rental kiosks make sure you won't go home alone on a Friday night again.
WIRED: Cheap, cheap, cheap. DVD rentals average two bucks a pop, with anywhere from 50 to 200 recent titles to select from in each kiosk, updated weekly. Game rentals to roll out this year.
TIRED: No streaming service? Bummer.
Blockbuster
Once the dominant force in the media-rental industry, Blockbuster has fared horribly over the past few years. After scoffing at Netflix's business model years ago, the big blue-and-gold company filed for bankruptcy last September.
However late, Blockbuster jumped on the bandwagon with its own Netflix clone mail-away service, but with the added advantage of allowing customers to return DVDs to brick-and-mortar Blockbuster stores. And finally, Blockbuster Express is a blue-and-gold Redbox rip, with kiosks placed in grocery stores and Kwik-E-Mart's across the country.
WIRED: The Dish Network acquisition could mean big things for Blockbuster when (or if) the companies get a game plan up and running.
TIRED: Brick and mortar is slowly dying, so the leg-up Blockbuster has on Netflix with in-store DVD exchange may soon be moot. Ripping off its two major competitors shows a lack of ability to innovate, possibly signifying that the company is still behind the times.
Hulu Plus
At $8 a month, Hulu Plus offers instant streaming access to a wealth of TV shows only a day or so after they've originally aired. But seriously, if you're paying a monthly fee, you shouldn't have to deal with mid-show commercial breaks. That's the whole point of paying for streaming service, right?
Still, I challenge you to find a more comprehensive archive of Hell's Kitchen reruns on the web.
WIRED: Streaming to all iOS devices and some Android smartphones and tablets. Tons of TV shows that aren't out to rent on DVD.
TIRED: Despite taking your $8 monthly fee, you still have to sit through asinine commercials. "Hundreds," not thousands, of movies to choose from. Again, no physical media. Rights agreements sometimes complicate how many episodes are available for viewing on the site.
Android Market
Google has struggled to keep up with Apple in its media service offerings, only recently debuting its movie rental service on the Android Market in conjunction with a complete interface makeover. Fortunately, renting flicks from Google is available on all Android devices running version 2.2 and up — that's something even Hulu can't say.
WIRED: Rental ain't pricey, averaging around two to five bucks a pop. Streaming to Android phones is nice. Compatible with PCs.
TIRED: No physical media. Not functional across all Android tablets.
iTunes and Apple TV
There's a down-payment to get Apple TV up and running in your home, and it's in the form of a small, sleek set-top box. Fortunately, it's only $100.
Along with Netflix compatibility, Apple lets you purchase and rent movies from its iTunes media store, along with the ability to buy TV shows (due to lack of customer demand, Apple discontinued TV show rentals last month). Further, you're able to watch streaming media on all of Apple's mobile devices. The company wants to hook you into an Apple-centric world, and the interconnection between its services makes it easier for customers to buy in.
WIRED: Purchase prices are par for the course, ranging from $1 to $3 depending on whether you want to rent or own. Ability to buy entire seasons of a show is convenient. Rumors and speculation have long suggested bigger plans for Apple TV's future, though Apple itself is staying mum on any potential developments.
TIRED: Lacks an "all-you-can-stream buffet" option, which can get costly if you watch a lot of flicks. Though its library is extensive, iTunes alone doesn't contain the esoteric indie films that Netflix totes. So if you're subscribing to Netflix and buying through iTunes at the same time, charges could add up fast.
Vudu
Wal-Mart got in on the media-services game in 2010 by buying Vudu, another streaming media company. Initially the service was available only in a set-top box version, but Vudu has since extended itself to other platforms as a standalone media service in and of itself, available to Playstation 3 users, Boxee for OSX owners and Windows-based PC users.
WIRED: Rentals and purchases stay on par with most other services, settling in the $1 to $5 range for rentals, and upwards of $5 for purchases. Titles available the same day they're released on DVD, unlike other services that require waiting periods. Streaming video available on iPad.
TIRED: No monthly unlimited movie-streaming option.
Showing posts with label Blockbuster. Show all posts
Showing posts with label Blockbuster. Show all posts
Thursday, September 29, 2011
Monday, September 27, 2010
From Blockbuster to turkey
http://www.economist.com/blogs/newsbook/2010/09/blockbuster_files_bankruptcy
From Blockbuster to turkey
Sep 23rd 2010,
The Economist
IN THE early days of the commercial internet, it was often predicted that pure e-commerce sites would begin to struggle as bricks-and-mortar stores moved online. “Clicks-and-mortar” stores, which could reach consumers both on the internet and on the high street, were thought to be inherently superior. Surely Blockbuster would be able to crush Netflix, an online service that rents DVDs through the post? Surely Barnes & Noble, a bookseller, would easily see off Amazon?
As it turned out, they could not. Shares in Barnes & Noble have slumped over the past few years as those of Amazon have soared. The British arm of Borders, another media retailer, went into administration last year. And on September 23rd Blockbuster filed for Chapter 11 bankruptcy protection in New York. The firm, once owned by Viacom, a giant media conglomerate, aims to reduce its debts by about $900m. It is likely to close some of its 3,000 American stores. (The company’s non-American operations and franchised outlets are not affected by the bankruptcy filing.)
The growth of Netflix, a technologically savvy company with a vastly superior website and an attractive subscription model, was hard on Blockbuster. But the firm was caught in a pincer movement. On one side was Netflix. On the other was the decidedly low-tech Redbox, owned by Coinstar. Redbox rents films for one dollar a night through kiosks in drug and grocery stores—a 1950s technology applied successfully to a new medium.
Netflix is a long-tail company. Its vast selection of DVDs means consumers with rarefied tastes can indulge their taste for Satyajit Ray films and Italian comedies. The firm is promoting the online streaming of older films, which subscribers will increasingly be able to obtain through internet-connected television sets. Redbox, in contrast, focuses on big films and recently-released DVDs. Blockbuster thus faces a “clicks” competitor that offers an enormous selection of films and a “mortar” competitor that specialises in hits. Life in between is tough.
Tears in Tinseltown
There will be no gloating in Hollywood at Blockbuster’s struggles. Although the film studios greatly prefer to sell DVDs than rent them, they would rather rent through Blockbuster than through Netflix or Redbox. Warner Bros estimated in December that it makes $1.45 when a film is rented from a bricks-and-mortar store. It makes $1.25 from a subscription rental, and just one dollar when a film is rented from a kiosk (most people keep their dollar-a-night kiosk movies for two nights). And Blockbuster sells DVDs as well as renting them.
Hollywood wants to persuade consumers to rent films as videos-on-demand through their cable and satellite boxes. On each of these Warner Bros earns fully $3.50. To goose demand, studios now release some films as videos-on-demand before bringing them out on DVD. The worry is that the growth of two low-priced alternatives will persuade couch potatoes that films can be had cheaply. Netflix and Redbox have severely wounded Blockbuster. The next battle will pit them against the cable companies.
From Blockbuster to turkey
Sep 23rd 2010,
The Economist
IN THE early days of the commercial internet, it was often predicted that pure e-commerce sites would begin to struggle as bricks-and-mortar stores moved online. “Clicks-and-mortar” stores, which could reach consumers both on the internet and on the high street, were thought to be inherently superior. Surely Blockbuster would be able to crush Netflix, an online service that rents DVDs through the post? Surely Barnes & Noble, a bookseller, would easily see off Amazon?
As it turned out, they could not. Shares in Barnes & Noble have slumped over the past few years as those of Amazon have soared. The British arm of Borders, another media retailer, went into administration last year. And on September 23rd Blockbuster filed for Chapter 11 bankruptcy protection in New York. The firm, once owned by Viacom, a giant media conglomerate, aims to reduce its debts by about $900m. It is likely to close some of its 3,000 American stores. (The company’s non-American operations and franchised outlets are not affected by the bankruptcy filing.)
The growth of Netflix, a technologically savvy company with a vastly superior website and an attractive subscription model, was hard on Blockbuster. But the firm was caught in a pincer movement. On one side was Netflix. On the other was the decidedly low-tech Redbox, owned by Coinstar. Redbox rents films for one dollar a night through kiosks in drug and grocery stores—a 1950s technology applied successfully to a new medium.
Netflix is a long-tail company. Its vast selection of DVDs means consumers with rarefied tastes can indulge their taste for Satyajit Ray films and Italian comedies. The firm is promoting the online streaming of older films, which subscribers will increasingly be able to obtain through internet-connected television sets. Redbox, in contrast, focuses on big films and recently-released DVDs. Blockbuster thus faces a “clicks” competitor that offers an enormous selection of films and a “mortar” competitor that specialises in hits. Life in between is tough.
Tears in Tinseltown
There will be no gloating in Hollywood at Blockbuster’s struggles. Although the film studios greatly prefer to sell DVDs than rent them, they would rather rent through Blockbuster than through Netflix or Redbox. Warner Bros estimated in December that it makes $1.45 when a film is rented from a bricks-and-mortar store. It makes $1.25 from a subscription rental, and just one dollar when a film is rented from a kiosk (most people keep their dollar-a-night kiosk movies for two nights). And Blockbuster sells DVDs as well as renting them.
Hollywood wants to persuade consumers to rent films as videos-on-demand through their cable and satellite boxes. On each of these Warner Bros earns fully $3.50. To goose demand, studios now release some films as videos-on-demand before bringing them out on DVD. The worry is that the growth of two low-priced alternatives will persuade couch potatoes that films can be had cheaply. Netflix and Redbox have severely wounded Blockbuster. The next battle will pit them against the cable companies.
Friday, March 28, 2008
Companies on S&P Watch List
http://money.aol.com/creditdebt/article/usa-today/_a/credit-crunch-puts-some-companies-on/20080324160309990001
Credit Crunch Puts Some Companies on S&P Watch List
By MATT KRANTZ, USA Today
2008-03-24
Homeowners aren't alone in struggling to keep up with their interest payments. As Bear Stearns' near-brush with bankruptcy shows, some companies also are dodging the repo man. Already this year, 24 public companies with assets worth $9.9 billion have filed for bankruptcy protection, BankruptcyData.com says. That's two-thirds higher than the defaults during the same periods in 2007 and 2006.
Things will likely get much worse. Bond watchers are braced for many more blowups as companies struggle with their debt loads and consumers cut back on their spending. Debt-rating agency Standard & Poor's expects at least 4.6% of speculative-graded companies to default by the end of the year, up from the 25-year low of 1.1% in January and above the historical 4.4% average, says Diane Vazza, managing director at S&P.
If S&P is right, that could mean as many as 74 additional defaulting companies within the next 12 months.
While nobody knows exactly which companies will default and which will turn themselves around, S&P's latest list of its "weakest links" shows companies that have the lowest credit ratings and face a strong possibility of additional downgrades.
Worldwide, there are 114 companies on the weakest-link list, the highest number in 16 months. And there are now 93 U.S. companies on the list, including some household names, such as Eddie Bauer, Sbarro, Guitar Center, Blockbuster, Six Flags and Linens 'n Things. The number of U.S. weakest-link companies jumped 13% from February through March, showing just how much strain some companies are under.
"We're on the first leg in the up-cycle of defaults," Vazza says. "The second half and in 2009, we're going to see a lot more deterioration. This is just the beginning."
There are some clear-cut trends among companies that are struggling the most, including those that:
Rely on consumer discretionary spending
Companies that depend on consumers spending money for non-essential items are most at risk as the economy slows, S&P says. Industries with the most "weak links" include entertainment, consumer products and restaurants.
One industry that really stands out is retailing. Consider Linens 'n Things, which sells home products. It is not publicly held and declined to comment for this story. But industry leader Bed Bath & Beyond cut its forecast for its fiscal fourth quarter ended in February. Bed Bath & Beyond has no long-term debt, unlike Linens 'n Things, which has $650 million, S&P says.
Another well-known retailer, Eddie Bauer, is on S&P's list. Last year, the seller of outdoor apparel lost $102 million on top of a $212 million loss in 2006. Eddie Bauer also carries heavy debt — more than $260 million, exceeding the $256 million of equity in the company, says S&P's Capital IQ.
Eddie Bauer is part of a trend that saw retailers boost debt by 31% the past year, says research from Marti Kopacz of Grant Thornton. Eddie Bauer did not return calls for comment. High debt is a heavy load for firms when shoppers are in a sluggish economy.
"You can buy fewer pillows and not eat out as many times," Vazza says.
But Robert Friedman, CEO of retailer Loehmann's, says being in a challenging business and having heavy debt shouldn't land his company on S&P's list. It's "uncalled for," he says. "We are not delinquent with any payments."
Carry heavy debt loads
Borrowing might have seemed like a sound idea when financing was cheap and easy to get, but companies that loaded up on debt now know it can bite hard when the economy slows and credit dries up.
When debt comes due, shakier companies that can't afford to pay it off may have trouble replacing it with new debt now that lenders have tightened up, says Jing Zhang, head of research at Moody's KMV. About $6.8 trillion in corporate loans and bonds come due this year, he says.
Just making payments on existing loans can be more onerous as business slows down.
Six Flags, the operator of amusement parks across the country, is attempting to turn around its business while carrying debt of $2.7 billion. "The debt is a problem," says David Miller, analyst at SMH Capital.
The suggestion Six Flags may be a candidate for bankruptcy any time soon is "silly," he says. The company has had a string of "biblically bad luck," including bad weather in many of its markets last year. While the company's debt load is large, it doesn't come due until 2010, Miller says.
Analysts expect the company's earnings to double in the third quarter, says Reuters Estimates. The company didn't return calls.
Heavy debt is also an issue at Blockbuster. The video rental chain's former parent company loaded it up with more than $1 billion in debt, says Michael Pachter, analyst at Wedbush Morgan.
But he thinks bankruptcy isn't a risk. The company's debt is down to $758 million, with just $44.7 million due this year and $56.5 million due next year, he says. Blockbuster is expected to generate at least $100 million in cash flow, more than enough to service the debt, so "The risk of default is nil in 2008 or 2009," he says.
Blockbuster also doesn't see imminent danger. "We expect to generate meaningful cash flow to return Blockbuster to profitability and be in full compliance with debt covenants," says spokesman Randy Hargrove.
Some blame private-equity firms for loading too much debt on companies they bought.
IAP Worldwide, a defense contractor owned by private-equity firm Cerberus, has $535 million in debt and is on S&P's list. But in an e-mailed response, Cerberus said IAP has been able to restructure its debt.
Face operational issues
Krispy Kreme is an example of companies on S&P's list that have had persistent problems in managing themselves profitably. Ever since the doughnut chain's accounting scandal in 2004 and 2005, it has been trying to turn itself around.
Aftereffects of the accounting mess coupled with too many new stores have put the company in a tight spot. It has lost money for 13-consecutive quarters, and Thomson Financial says analysts expect the company to lose money again when it reports fiscal fourth-quarter results April 7. Its stock has fallen more than 90% the past five years. Krispy Kreme has had a revolving door of executives and in January named a new CEO. A few months earlier, it said it would realign operations. Krispy Kreme declined to comment for this story.
But while some companies and industries face serious challenges both internally and externally, Moody's Zhang doesn't expect a serious default epidemic. "Default risk has been increasing," he says. "But the relative level is very low."
Credit Crunch Puts Some Companies on S&P Watch List
By MATT KRANTZ, USA Today
2008-03-24
Homeowners aren't alone in struggling to keep up with their interest payments. As Bear Stearns' near-brush with bankruptcy shows, some companies also are dodging the repo man. Already this year, 24 public companies with assets worth $9.9 billion have filed for bankruptcy protection, BankruptcyData.com says. That's two-thirds higher than the defaults during the same periods in 2007 and 2006.
Things will likely get much worse. Bond watchers are braced for many more blowups as companies struggle with their debt loads and consumers cut back on their spending. Debt-rating agency Standard & Poor's expects at least 4.6% of speculative-graded companies to default by the end of the year, up from the 25-year low of 1.1% in January and above the historical 4.4% average, says Diane Vazza, managing director at S&P.
If S&P is right, that could mean as many as 74 additional defaulting companies within the next 12 months.
While nobody knows exactly which companies will default and which will turn themselves around, S&P's latest list of its "weakest links" shows companies that have the lowest credit ratings and face a strong possibility of additional downgrades.
Worldwide, there are 114 companies on the weakest-link list, the highest number in 16 months. And there are now 93 U.S. companies on the list, including some household names, such as Eddie Bauer, Sbarro, Guitar Center, Blockbuster, Six Flags and Linens 'n Things. The number of U.S. weakest-link companies jumped 13% from February through March, showing just how much strain some companies are under.
"We're on the first leg in the up-cycle of defaults," Vazza says. "The second half and in 2009, we're going to see a lot more deterioration. This is just the beginning."
There are some clear-cut trends among companies that are struggling the most, including those that:
Rely on consumer discretionary spending
Companies that depend on consumers spending money for non-essential items are most at risk as the economy slows, S&P says. Industries with the most "weak links" include entertainment, consumer products and restaurants.
One industry that really stands out is retailing. Consider Linens 'n Things, which sells home products. It is not publicly held and declined to comment for this story. But industry leader Bed Bath & Beyond cut its forecast for its fiscal fourth quarter ended in February. Bed Bath & Beyond has no long-term debt, unlike Linens 'n Things, which has $650 million, S&P says.
Another well-known retailer, Eddie Bauer, is on S&P's list. Last year, the seller of outdoor apparel lost $102 million on top of a $212 million loss in 2006. Eddie Bauer also carries heavy debt — more than $260 million, exceeding the $256 million of equity in the company, says S&P's Capital IQ.
Eddie Bauer is part of a trend that saw retailers boost debt by 31% the past year, says research from Marti Kopacz of Grant Thornton. Eddie Bauer did not return calls for comment. High debt is a heavy load for firms when shoppers are in a sluggish economy.
"You can buy fewer pillows and not eat out as many times," Vazza says.
But Robert Friedman, CEO of retailer Loehmann's, says being in a challenging business and having heavy debt shouldn't land his company on S&P's list. It's "uncalled for," he says. "We are not delinquent with any payments."
Carry heavy debt loads
Borrowing might have seemed like a sound idea when financing was cheap and easy to get, but companies that loaded up on debt now know it can bite hard when the economy slows and credit dries up.
When debt comes due, shakier companies that can't afford to pay it off may have trouble replacing it with new debt now that lenders have tightened up, says Jing Zhang, head of research at Moody's KMV. About $6.8 trillion in corporate loans and bonds come due this year, he says.
Just making payments on existing loans can be more onerous as business slows down.
Six Flags, the operator of amusement parks across the country, is attempting to turn around its business while carrying debt of $2.7 billion. "The debt is a problem," says David Miller, analyst at SMH Capital.
The suggestion Six Flags may be a candidate for bankruptcy any time soon is "silly," he says. The company has had a string of "biblically bad luck," including bad weather in many of its markets last year. While the company's debt load is large, it doesn't come due until 2010, Miller says.
Analysts expect the company's earnings to double in the third quarter, says Reuters Estimates. The company didn't return calls.
Heavy debt is also an issue at Blockbuster. The video rental chain's former parent company loaded it up with more than $1 billion in debt, says Michael Pachter, analyst at Wedbush Morgan.
But he thinks bankruptcy isn't a risk. The company's debt is down to $758 million, with just $44.7 million due this year and $56.5 million due next year, he says. Blockbuster is expected to generate at least $100 million in cash flow, more than enough to service the debt, so "The risk of default is nil in 2008 or 2009," he says.
Blockbuster also doesn't see imminent danger. "We expect to generate meaningful cash flow to return Blockbuster to profitability and be in full compliance with debt covenants," says spokesman Randy Hargrove.
Some blame private-equity firms for loading too much debt on companies they bought.
IAP Worldwide, a defense contractor owned by private-equity firm Cerberus, has $535 million in debt and is on S&P's list. But in an e-mailed response, Cerberus said IAP has been able to restructure its debt.
Face operational issues
Krispy Kreme is an example of companies on S&P's list that have had persistent problems in managing themselves profitably. Ever since the doughnut chain's accounting scandal in 2004 and 2005, it has been trying to turn itself around.
Aftereffects of the accounting mess coupled with too many new stores have put the company in a tight spot. It has lost money for 13-consecutive quarters, and Thomson Financial says analysts expect the company to lose money again when it reports fiscal fourth-quarter results April 7. Its stock has fallen more than 90% the past five years. Krispy Kreme has had a revolving door of executives and in January named a new CEO. A few months earlier, it said it would realign operations. Krispy Kreme declined to comment for this story.
But while some companies and industries face serious challenges both internally and externally, Moody's Zhang doesn't expect a serious default epidemic. "Default risk has been increasing," he says. "But the relative level is very low."
Wednesday, February 27, 2008
DVD FORMATS
http://www.theglobeandmail.com/servlet/story/LAC.20080220.RBLURAY20/TPStory/?query=Toshiba
DVD FORMATS: HOW SONY'S BLU-RAY TRIUMPHED OVER TOSHIBA'S HD
Stringer makes his mark
Sony's CEO led his company to victory in the high-definition sweepstakes by convincing the major studios to come aboard
BARRIE MCKENNA AND MATT HARTLEY
February 20, 2008
WASHINGTON, TORONTO -- Howard Stringer made history in 2005 for being the first non-Japanese executive to take the helm at Sony Corp. But he may be better remembered as the one who won the high-definition war, erasing the stain on the electronics firm's image ever since it lost the videotape war two decades earlier.
Although celebrated yesterday, the victory was sealed last month when Sony swayed Warner Bros. to back Sony's Blu-ray technology and quit producing movies using Toshiba Corp.'s rival HD DVD format.
What remains a mystery is just how big a push Warner needed to pick sides. Analysts say Sony only prevailed following a heated bidding war against Toshiba, with the reward reaching as much as $400-million (U.S.). Neither side has confirmed the size of any bids or payments.
It was supposed to be the technology equivalent of First World War trench warfare: A prolonged battle to the death between Toshiba and Sony for global domination in high-definition DVDs.
In the end, the denouement was more like Germany's swift 1940 end run of the Maginot line.
Less than two years after its first HD DVD player hit the market, Toshiba president Atsutoshi Nishida raised the white flag, declaring yesterday that it would stop making and selling the devices altogether within a month.
Toshiba's unconditional surrender leaves the spoils to Sony, maker of the rival Blu-ray disc player - a technologically superior format that had the backing of virtually all the major movie studies and retailers.
"We simply had no chance to win," Mr. Nishida acknowledged bluntly.
The final straw, he said, was Warner's decision last month to exclusively release movies in Blu-ray. The decision by Warner, with about 20 per cent of the movie market, put a critical mass of the industry in the Blu-ray camp.
With billions of dollars in global sales at stake, experts had predicted the Toshiba-Sony battle would go on for years - not unlike the 1980s battle of videotape formats between VHS (Matsushita) and Betamax (Sony). That war lasted a decade, leaving Sony battered and humiliated.
So how did this epic battle come to such an abrupt end?
The answer lies in part with the bruising Sony experienced with Betamax, which, like Blu-ray, was also the better product on paper.
For more that 20 years, Sony has been "haunted by Betamax" and was fiercely determined not to let history repeat itself, explained Xavier Drèze, a marketing professor at the University of Pennsylvania's Wharton business school.
"Sony was much smarter," Prof. Drèze said. "They understood this time they couldn't do it alone. They understood that they needed strategic partnerships with industry players."
The war was over when Sony managed to line up a critical mass of partners - in Hollywood, Silicon Valley and on Main Street.
The tipping point was Warner Bros. But Sony Pictures, Walt Disney Co. and News Corp.'s Twentieth Century Fox Film Corp. had already done the same - signing exclusive sealed deals with presumably rich royalty arrangements.
"This was heavy hitters in a back room talking about what the royalty structure was going to be and how much money they were willing to put on the table to be exclusive with one camp or the other. That was the determining factor here," concluded Van Baker, an analyst with market research firm Gartner Inc.
Until last month, Warner had been backing both technologies.
Last Friday, Wal-Mart Stores Inc. announced it would sell only Blu-ray DVDs. Officials said "customer feedback" prompted its decision.
Netflix Inc., Best Buy Co. Inc., Blockbuster Inc. and Target Corp. had earlier done the same.
"Everyone was tired of the format war, the retailers were tired of it, the consumer electronics vendors were tired of it and they just wanted this thing to get settled," Mr. Baker said.
"Consumers and the industry learned the hard way with Beta and VHS that a prolonged format war was disastrous. There was a lot of motivation to get one or the other to win and the only thing that protracted it was the amount of money flying around."
The groundwork for Sony's stunning victory, however, came months, even years ago. Prof. Drèze said Blu-ray had several things going for it that helped it to build loyalty with consumers and the industry.
Six years ago yesterday - and years before the first Blu-ray disc or player was sold - Sony had lined up most of the other computer and electronics makers, including LG Electronics, Panasonic, Samsung, Apple and Dell.
Sony also owned a major movie studio. So it could push its own technology.
Third, the company sold Blu-ray to rival movie studios with the promise of superior digital copyright protection.
Sony also used its PlayStation video game console, which also works as a Blu-ray player, as a sort of "Trojan horse," Prof. Drèze said.
Sony has already sold 10.5 million of its PS3 consoles, compared with roughly one million HD DVD players. PlayStation buyers, he said, unwittingly embraced Blu-ray and undermined HD DVD.
Ultimately, the technology is superior. Blu-ray can hold up to three times more data (200 gigabytes versus 60) and offers higher resolution.
In the end, it could be a pyrrhic victory for Sony. The age of hard copy discs is already giving way to digital downloads, stored and played from PCs, iPods and other portable devices.
"I don't think the heyday of DVD is going to return," said Mr. Baker, the analyst. "For most consumers, digital downloads are going to be very appealing."
How Sony lost Betamax
1 QUALITY OVER
QUANTITY Despite better picture quality, Sony's original Betamax tapes could record only one hour of video, while rival VHS tapes could store double that.
2 SECRET RECIPE
Sony initially failed to license its Betamax technology to a sufficient number of manufacturers, thinking it could go it alone. This led to a situation where VHS players competed against one another for share, driving down prices and making the format more attractive to consumers.
3 BUYING V. RENTING When both systems arrived in the United States in the mid-1970s, VHS machines were less expensive to rent. When consumers began to purchase rather than rent their video players, they tended to go with VHS machines. 4PORN CONUNDRUM Sony refused to license the Betamax technology to adult film companies, who turned to VHS tapes and ended up creating a multibillion-dollar industry.
How Sony won Blu-ray
1 BIGGER IS BETTER
Sony's Blu-ray discs can store upward of 50 gigabytes of data on a single disc, while HD DVDs hold about 30 gigs.
2 PLAYSTATION 3
By including a Blu-ray drive in its next-generation video game console, Sony was able to drive sales of both the PS3 and its new DVD format.
3 SOLID PARTNERSHIPS Not wanting to duplicate the Betamax mistake, Sony took the initiative to license its Blu-ray technology with as many partners as possible. When Blu-ray was first announced in 2002, Sony had already signed up eight partner companies committed to producing players.
4 CONTENT IS KING
By signing exclusive deals with more studios and content providers than Toshiba, Sony was able to squeeze its competitor to the sidelines. Warner's defection to Blu-ray was the fatal blow.
Matt Hartley
Dead technologies
Media formats we have used, loved and discarded for the next best thing
The cassette tape
A Walkman and roller skates, anyone? Tapes were the original portable format and made music pirates of us all. (Can I tape your Fleetwood Mac Rumors?) But they were hated by record companies. The sound quality tended to go tinny after a few dozen plays, and many tapes wound up melting in a car on a sunny day.
Eight tracks
Developed by plane maker Bill Lear, eight-track tapes were large and couldn't be rewound. And because of their high tape speed, didn't sound great. Nevertheless, they were popular in the 1970s, thanks to the auto industry, which installed thousands of eight-track players. When sales slipped, companies eager to pare formats quickly dropped the eight track. Vinyl
Cumbersome to play and easily damaged, albums faded out in the late 1980s. But album covers managed to become a genuine art form and another way to grab music buyers' attention. Lately, albums have a enjoyed a comeback, thanks to collectors, club DJs and scratching (ask your kids).
Compact discs
CDs are dead? They will be soon. Who needs all those plastic cases and discs when you can fill your hard drive and iPod with thousands of songs? Using a credit card, of course. Downloading music for free is wrong, isn't it?
DVD FORMATS: HOW SONY'S BLU-RAY TRIUMPHED OVER TOSHIBA'S HD
Stringer makes his mark
Sony's CEO led his company to victory in the high-definition sweepstakes by convincing the major studios to come aboard
BARRIE MCKENNA AND MATT HARTLEY
February 20, 2008
WASHINGTON, TORONTO -- Howard Stringer made history in 2005 for being the first non-Japanese executive to take the helm at Sony Corp. But he may be better remembered as the one who won the high-definition war, erasing the stain on the electronics firm's image ever since it lost the videotape war two decades earlier.
Although celebrated yesterday, the victory was sealed last month when Sony swayed Warner Bros. to back Sony's Blu-ray technology and quit producing movies using Toshiba Corp.'s rival HD DVD format.
What remains a mystery is just how big a push Warner needed to pick sides. Analysts say Sony only prevailed following a heated bidding war against Toshiba, with the reward reaching as much as $400-million (U.S.). Neither side has confirmed the size of any bids or payments.
It was supposed to be the technology equivalent of First World War trench warfare: A prolonged battle to the death between Toshiba and Sony for global domination in high-definition DVDs.
In the end, the denouement was more like Germany's swift 1940 end run of the Maginot line.
Less than two years after its first HD DVD player hit the market, Toshiba president Atsutoshi Nishida raised the white flag, declaring yesterday that it would stop making and selling the devices altogether within a month.
Toshiba's unconditional surrender leaves the spoils to Sony, maker of the rival Blu-ray disc player - a technologically superior format that had the backing of virtually all the major movie studies and retailers.
"We simply had no chance to win," Mr. Nishida acknowledged bluntly.
The final straw, he said, was Warner's decision last month to exclusively release movies in Blu-ray. The decision by Warner, with about 20 per cent of the movie market, put a critical mass of the industry in the Blu-ray camp.
With billions of dollars in global sales at stake, experts had predicted the Toshiba-Sony battle would go on for years - not unlike the 1980s battle of videotape formats between VHS (Matsushita) and Betamax (Sony). That war lasted a decade, leaving Sony battered and humiliated.
So how did this epic battle come to such an abrupt end?
The answer lies in part with the bruising Sony experienced with Betamax, which, like Blu-ray, was also the better product on paper.
For more that 20 years, Sony has been "haunted by Betamax" and was fiercely determined not to let history repeat itself, explained Xavier Drèze, a marketing professor at the University of Pennsylvania's Wharton business school.
"Sony was much smarter," Prof. Drèze said. "They understood this time they couldn't do it alone. They understood that they needed strategic partnerships with industry players."
The war was over when Sony managed to line up a critical mass of partners - in Hollywood, Silicon Valley and on Main Street.
The tipping point was Warner Bros. But Sony Pictures, Walt Disney Co. and News Corp.'s Twentieth Century Fox Film Corp. had already done the same - signing exclusive sealed deals with presumably rich royalty arrangements.
"This was heavy hitters in a back room talking about what the royalty structure was going to be and how much money they were willing to put on the table to be exclusive with one camp or the other. That was the determining factor here," concluded Van Baker, an analyst with market research firm Gartner Inc.
Until last month, Warner had been backing both technologies.
Last Friday, Wal-Mart Stores Inc. announced it would sell only Blu-ray DVDs. Officials said "customer feedback" prompted its decision.
Netflix Inc., Best Buy Co. Inc., Blockbuster Inc. and Target Corp. had earlier done the same.
"Everyone was tired of the format war, the retailers were tired of it, the consumer electronics vendors were tired of it and they just wanted this thing to get settled," Mr. Baker said.
"Consumers and the industry learned the hard way with Beta and VHS that a prolonged format war was disastrous. There was a lot of motivation to get one or the other to win and the only thing that protracted it was the amount of money flying around."
The groundwork for Sony's stunning victory, however, came months, even years ago. Prof. Drèze said Blu-ray had several things going for it that helped it to build loyalty with consumers and the industry.
Six years ago yesterday - and years before the first Blu-ray disc or player was sold - Sony had lined up most of the other computer and electronics makers, including LG Electronics, Panasonic, Samsung, Apple and Dell.
Sony also owned a major movie studio. So it could push its own technology.
Third, the company sold Blu-ray to rival movie studios with the promise of superior digital copyright protection.
Sony also used its PlayStation video game console, which also works as a Blu-ray player, as a sort of "Trojan horse," Prof. Drèze said.
Sony has already sold 10.5 million of its PS3 consoles, compared with roughly one million HD DVD players. PlayStation buyers, he said, unwittingly embraced Blu-ray and undermined HD DVD.
Ultimately, the technology is superior. Blu-ray can hold up to three times more data (200 gigabytes versus 60) and offers higher resolution.
In the end, it could be a pyrrhic victory for Sony. The age of hard copy discs is already giving way to digital downloads, stored and played from PCs, iPods and other portable devices.
"I don't think the heyday of DVD is going to return," said Mr. Baker, the analyst. "For most consumers, digital downloads are going to be very appealing."
How Sony lost Betamax
1 QUALITY OVER
QUANTITY Despite better picture quality, Sony's original Betamax tapes could record only one hour of video, while rival VHS tapes could store double that.
2 SECRET RECIPE
Sony initially failed to license its Betamax technology to a sufficient number of manufacturers, thinking it could go it alone. This led to a situation where VHS players competed against one another for share, driving down prices and making the format more attractive to consumers.
3 BUYING V. RENTING When both systems arrived in the United States in the mid-1970s, VHS machines were less expensive to rent. When consumers began to purchase rather than rent their video players, they tended to go with VHS machines. 4PORN CONUNDRUM Sony refused to license the Betamax technology to adult film companies, who turned to VHS tapes and ended up creating a multibillion-dollar industry.
How Sony won Blu-ray
1 BIGGER IS BETTER
Sony's Blu-ray discs can store upward of 50 gigabytes of data on a single disc, while HD DVDs hold about 30 gigs.
2 PLAYSTATION 3
By including a Blu-ray drive in its next-generation video game console, Sony was able to drive sales of both the PS3 and its new DVD format.
3 SOLID PARTNERSHIPS Not wanting to duplicate the Betamax mistake, Sony took the initiative to license its Blu-ray technology with as many partners as possible. When Blu-ray was first announced in 2002, Sony had already signed up eight partner companies committed to producing players.
4 CONTENT IS KING
By signing exclusive deals with more studios and content providers than Toshiba, Sony was able to squeeze its competitor to the sidelines. Warner's defection to Blu-ray was the fatal blow.
Matt Hartley
Dead technologies
Media formats we have used, loved and discarded for the next best thing
The cassette tape
A Walkman and roller skates, anyone? Tapes were the original portable format and made music pirates of us all. (Can I tape your Fleetwood Mac Rumors?) But they were hated by record companies. The sound quality tended to go tinny after a few dozen plays, and many tapes wound up melting in a car on a sunny day.
Eight tracks
Developed by plane maker Bill Lear, eight-track tapes were large and couldn't be rewound. And because of their high tape speed, didn't sound great. Nevertheless, they were popular in the 1970s, thanks to the auto industry, which installed thousands of eight-track players. When sales slipped, companies eager to pare formats quickly dropped the eight track. Vinyl
Cumbersome to play and easily damaged, albums faded out in the late 1980s. But album covers managed to become a genuine art form and another way to grab music buyers' attention. Lately, albums have a enjoyed a comeback, thanks to collectors, club DJs and scratching (ask your kids).
Compact discs
CDs are dead? They will be soon. Who needs all those plastic cases and discs when you can fill your hard drive and iPod with thousands of songs? Using a credit card, of course. Downloading music for free is wrong, isn't it?
Thursday, January 3, 2008
Will The iPod Kill Blockbuster?
http://www.forbes.com/technology/2007/12/28/apple-movie-rental-tech-media-cx_bc_1228apple.html
Apple's World
Will The iPod Kill Blockbuster?
Brian Caulfield 12.28.07
Burlingame, Calif. - Forget the cavernous big box stores that laid waste to the retail landscape a decade ago. Apple Chief Executive Steve Jobs' tiny iPod has turned his company into a category killer for the digital era--first wiping out music stores and now, potentially, the corner video store.
Starting in mid-January, the Cupertino, Calif., computer and gadget maker will take on Blockbuster and Netflix by renting movies from Fox on its iTunes digital media store, according to a report first published in the Financial Times earlier this week.
While older models of the iPod--and its low-end iPod Shuffle--can't play digital video, the gadgets now have a proven record of disruption, with customers bypassing record stores to tap into illegal distribution networks, along with Apple's iTunes music store, to fill the up their devices.
The result: Sales of CDs fell more than 30% to 614.9 million units last year from a peak of 881.9 million in 2000, according to the Recording Industry Association. Once sprawling chains, such as Tower Records, have shuttered.
Apple, however, isn't the first major tech company to offer digital video rentals. Amazon rents movies to users of PCs and TiVos via its Unbox service. Microsoft is even offering digital movie rentals on its XBox 360 game console. Neither company, however, poses the same threat to DVD rental companies as Apple, which has an installed base of more than 100 million digital media devices that consumers carry in their pockets.
Since Apple first began offering video content in its store two years ago, Jobs has expanded the company's video offerings. The weak link: the AppleTV set-top box effort. Some industry observers estimate that the device has sold fewer than 1 million units since it went on sale earlier this year, so video rentals could surely revive the effort.
Despite Apple's movie rental push, Blockbuster and Netflix won't disappear tomorrow. They likely will continue to slug it out in the business of renting digital video discs. Blockbuster has moved to counter the threat from Netflix, which mails movies to customers who queue up their orders online, with a Web-based service of its own. Netflix, meanwhile, allows customers to rent digital movies for their PCs.
Still, their days might be numbered: The iPod has killed before. It will kill again.
Shares of Netflix sagged 2.19% to $26.85 in Friday trading. Shares of Blockbuster fell 1.03% to $3.86. Apple rose 0.40% to $199.37.
Apple's World
Will The iPod Kill Blockbuster?
Brian Caulfield 12.28.07
Burlingame, Calif. - Forget the cavernous big box stores that laid waste to the retail landscape a decade ago. Apple Chief Executive Steve Jobs' tiny iPod has turned his company into a category killer for the digital era--first wiping out music stores and now, potentially, the corner video store.
Starting in mid-January, the Cupertino, Calif., computer and gadget maker will take on Blockbuster and Netflix by renting movies from Fox on its iTunes digital media store, according to a report first published in the Financial Times earlier this week.
While older models of the iPod--and its low-end iPod Shuffle--can't play digital video, the gadgets now have a proven record of disruption, with customers bypassing record stores to tap into illegal distribution networks, along with Apple's iTunes music store, to fill the up their devices.
The result: Sales of CDs fell more than 30% to 614.9 million units last year from a peak of 881.9 million in 2000, according to the Recording Industry Association. Once sprawling chains, such as Tower Records, have shuttered.
Apple, however, isn't the first major tech company to offer digital video rentals. Amazon rents movies to users of PCs and TiVos via its Unbox service. Microsoft is even offering digital movie rentals on its XBox 360 game console. Neither company, however, poses the same threat to DVD rental companies as Apple, which has an installed base of more than 100 million digital media devices that consumers carry in their pockets.
Since Apple first began offering video content in its store two years ago, Jobs has expanded the company's video offerings. The weak link: the AppleTV set-top box effort. Some industry observers estimate that the device has sold fewer than 1 million units since it went on sale earlier this year, so video rentals could surely revive the effort.
Despite Apple's movie rental push, Blockbuster and Netflix won't disappear tomorrow. They likely will continue to slug it out in the business of renting digital video discs. Blockbuster has moved to counter the threat from Netflix, which mails movies to customers who queue up their orders online, with a Web-based service of its own. Netflix, meanwhile, allows customers to rent digital movies for their PCs.
Still, their days might be numbered: The iPod has killed before. It will kill again.
Shares of Netflix sagged 2.19% to $26.85 in Friday trading. Shares of Blockbuster fell 1.03% to $3.86. Apple rose 0.40% to $199.37.
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