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Blockbuster is Dead, Long Live Vudu

John on March 3, 2010 at 9:41 am

Big Hollywood links to this Variety story about the declining fortunes of Blockbuster video:

Moody’s Investors Service has lowered shares of Blockbuster two notches closer to default, worrying that the company’s weak bottom line and heavy debt repayment schedule — to lower some $1 billion in debt — increases the likelihood of a distressed exchange.

The Dallas-based company has been closing stores as more consumers switch to online rental services and kiosks. Blockbuster lost $435 million in the fourth quarter.

As a result, Moodys lowered Blockbuster from “Caa1″ to “Caa3,” two notches into junk status.

They had a good run and now they’re done.

I imagine my own rental habits are emblematic of the change in user preferences. Specifically, I used to rent at Blockbuster all the time. Then they started raising prices and I moved over to a local chain called Jungle video which charges half as much per rental. I’d still visit Blockbuster once in a while, but it stopped being my first choice.

This Christmas I got a Blu-ray player with wireless networking. I upgraded my router to the wireless N standard and took the plunge with Netflix. Why Netflix? Because for $9 a month I can rent 4-5 movies by mail (usually stuff for the kids) plus I get unlimited streaming of about 10K titles any time I want. In the last month I’ve caught some great old films (Yojimbo, Vanishing Point), some interesting documentaries (King of Kong, Michael Moore Hates America) and a few TV classics (Fawlty Towers), all of it essentially for free.

I’ve also become a convert to Vudu. Vudu is what streaming media is supposed to be but never really was until now. You either buy their little set-top box or get a blu-ray player that has the service built in. Either way, you can browse their entire catalog from your TV. You can preview titles and select the quality of delivery (and thereby the price as well). It works flawlessly, though I wish the prices (comparable to Blockbuster) weren’t so high. I never tried Apple TV, so I can’t compare, but Vudu is aces.

The industry has finally made the shift people have been predicting for years. Stores are obsolete. Soon the discs will be obsolete too. It’s way to early to say who will be the next Blockbuster video success story. But if I had to lay my money on someone right now, I’d bet on Vudu.

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