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Could Apple and the iPod Save Blockbuster Video?
Thursday, February 16th, 2006 at 2:00 PM - by Brad Cook
Blockbuster Video is on the ropes, stuck with an inefficient business model and a stock in serious decline, but Apple could step in to save the day, according to Robert X. Cringely's latest column. He notes that as video distribution goes digital and NetFlix continues to dominate the by-mail delivery method, Blockbuster's brick-and-mortar shops become increasingly irrelevant.
However, the company has two things going for it -- neighborhood locations and a customer base -- that Apple would love to have, Mr. Cringely thinks. "[Apple CEO Steve Jobs] has no use for Blockbuster management, labor, or even all that shelf space," he wrote. "All Steve values about Blockbuster stores are the sign and the checkout counter."
So, he reasons, Apple steps in with a new iPod equipped with video- and audio-out. Consumers take it to their local Blockbuster, insert it in a kiosk dock, and download the movies of their choice for either rental or purchase. They then take it home and hook it up to their TV for viewing. Rentals time out, so there's no need to go back to the store and "return" them.
As a result, Blockbuster gets to phase out its inventory, along with the labor required to manage it, and sells iPods along with snacks and other products. As for Apple? Mr. Cringely explains: "The point here is to sell iPods to people who might not otherwise every buy one (my Mom, for example), to bring digital downloads to people who don't have broadband or even a computer, and to make it all incredibly easy."
He cautions, however, that "this strategy does not in any way mean Apple would be giving-up Internet movie distribution. This is just another outlet for the same material but aimed at folks who can't be reached over the Net."
And, of course, he notes, "don't forget the 5800 xSans, 11,600 xServes, and 60,000+ iMacs it would take to outfit all of Blockbuster's U.S. stores."
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