Downplaying home video rental woes

Downplaying home video rental woes
CBS MarketWatch is telling its readers that rumors of the demise of the home video rental business are premature. The story does a pretty good job of highlighting the problem (DVDs, DVRs, VOD) but makes a case that there are other options for these businesses, like selling DVDs.

(Dennis) McAlpine, (president of McAlpine Associates) said Viacom might be smart to sell Blockbuster, but the chain “could see get some improvement if its DVD sales go up.” The caveat is that if Blockbuster comes to rely more on sales, it would face stiff competition from giant discount outlets like Wal-Mart and Price Club.
The story goes along just fine until the writer makes a silly comparison:

Those who see the video store’s imminent demise may be making a similar mistake to the those who overestimated online shopping’s appeal in the late 1990s, said Gale Daikoku, an analyst with research firm Gartner G2 in Silicon Valley.

“People were saying online retailing was going to overtake everything,” Daikoku said. “And it’s still less than 2 percent of total sales.”

Balderdash! Gartner G2 is a quality firm, but what kind of fool makes such a dreadful red herring comparison? Take it from me. The video home rental business is screwed. The best blockbuster can do is use its brand to explore other digital video delivery options, but there’s hefty competition there too. As a growth industry, however, put a fork in it, ’cause it’s done.

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