More handwriting on the wall — Blockbuster

More handwriting on the wall
Media giant Viacom is dumping Blockbuster. That’s right. The folks who give us MTV, CBS and much, much more apparently think the days of video rentals are numbered. Am I the only observer to think this is significant? The Dow Jones News Wire reports that after years of indecision, Viacom is poised to get rid of Blockbuster by divesting its 82% stake in the company.

The video-rental market has been weakening under the onslaught of low-price DVDs aimed at the retail market, and investors increasingly see Viacom’s exposure to Blockbuster as a liability for the entertainment powerhouse.
The development of the neighborhood video rental store was made possible when videotape technology became available to homes. Remember the war between VHS and Beta? The VCR was a breakthrough in home entertainment, but DVDs have made that technology passé. Some manufacturers have even announced that they won’t be making VCRs anymore. The concept of a neighborhood DVD rental store isn’t as viable as a home video rental store, because digital video can be delivered other ways. In addition, as the article points out, people are just buying DVDs, because they’re so inexpensive. The video rental store was viable, because the videos went for $30, making a $4 rental fee a bargain. Hence, these stores are falling victim to disruptive innovations. Who would’ve believed that just 10 years ago?

Pay attention, broadcasters!

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