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Blockbuster holds onto Warner in struggle to survive

BlockbusterStore1 Blockbuster Inc. has gotten some much needed flexibility for the rest of the year from one of its top movie suppliers.

Warner Bros. has renewed its distribution agreement with the struggling DVD chain through the end of 2010. As part of the deal, Blockbuster will get discs for all of its services the day they go on sale.

That has been standard practice for retail rentals and digital downloads, but it wasn't clear whether Warner would allow Blockbuster to provide movies the day they go on sale through its mail service. The studio recently signed a deal with fast-growing mail rental company Netflix that prevents it from renting movies until 28 days after they go on sale.

In addition, Blockbuster will get increased supplies of Warner movies.

The new deal comes with altered financial terms. According to a person familiar with the agreement who asked not to be identified because its details are private, Blockbuster will get more flexibility in how much it pays upfront in exchange for ultimately providing Warner with a higher percentage of income from its movies as part of a revenue-sharing agreement.

Blockbuster could use the relief on upfront payments. It recently warned investors that if studios tightened credit terms, it might need to file for Chapter 11 bankruptcy protection.

--Ben Fritz

Photo: A Blockbuster in Dallas. Credit: Ron Heflin / Associated Press.

Comments () | Archives (5)

What is the matter with Warner? It would rather invest in a struggling and useless company like Blockbuster rather than a growing and successful company like Netflix or Redbox? Warner Bros. has just agreed to put its DVDs into Blockbuster stores that are closing and that very few people even visit anymore. If you're looking for more money, Warner, you went to the wrong place. Do not assist Blockbuster for they will only hurt you, not help you.

@ Nomo
They did it because they realised that the future of media distribution isn't going to be 100% vending and internet. There are always going to be people that want the "human touch" that is lacked within online and vending. Although I admit blockbuster is going to need alot of changes, firstly downsizing because demand isn't as much as they have supply (stores). Further steps could be taken to take advantage of their video game trading service because of its current immunity to the digital era today (most ps3, 360, and wii games are physically distributed). It would be tough, and blockbuster will need alot of support if they want to survive time warner is the first step.

I live in Casper, Wy and I used to do business with Blockbuster until March 11, 2010. After paying a late fee for a previous movie they said was returned late, I rented another movie on March 8, 2010 and returned it on March 11, 2010. I brought the movies inside and requested that it be checked in at that thime, just as I suspected another late charge. The clerk try to tell me that the movie was rented on March 6, 2010, however because I was suspecious of errorenous late fees I was very aware what day I rented this movie. I did not say anything to the clerk but I made a promise to myself that I would never enter a blockbuster again. So all you BlockBiuster customers be ware of bogus late fees.

By the way I had the opportunity to visit a small town in Kansas and the Blockbuster there rent movies that where released 90 day prior where rented as old movies, and you could rent 5 old movies for $5.00 and could keep them for 7 days. In Casper a movie that has been out for 12 months (Hancock) still rents as a new movie at a price of $4.69 and you can only keep them for 3 days.

Goodbye Blockbuster. Hello Netflix

To answer your question Netflix pays for the movie once, Blockbuster pays them for each time the movie is rented. Studios make more money from Blockbuster than they do from Redbox or Netflix.

Blockbuster also offers a On Demand service through several services such as TVs, Phones, Bluray players, and Tivo devices. Yea netflix does too, but you they have to wait 7 years to get most of their moves for streaming and require a computer. With Blockbuster you can get a new release day in day out and only need the TV or Player.

It's pathetic, really. Blockbuster thinking it still has a chance.

Now that the four-week window for 'The Blind Side' is over, Blockbuster will cease to be relevant again.


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