Posted by: nickgerlich | April 15, 2008

Pass It On

Score another point for E-Commerce. Yesterday’s announcement that Blockbuster has offered $1 billion to buy beleaguered electronics retailer Circuit City signifies a change in course for the movie rental giant.

And the winner is Netflix, the online movie rental specialist Blockbuster has been chasing for several years. The difference this time is that coyote had to find something else to eat, for this rabbit never ran out of air.

BlockbusterThis move doesn’t completely mean that Blockbuster has given up on new media or methods, for it still owns Movielink, a movie download site. But the effort to buy Circuit City reveals their commitment to BAM retailing.

And it actually makes a lot of sense. Blockbuster is a household word when it comes to movie rentals, and if they are successful in buying out Circuit City, they will be able to combine software and hardware sales and rentals under one roof, kind of like the synergy that was created when FedEx bought Kinko’s.

Of course, there is still a lot of risk. Never mind that Blockbuster may have difficulty coming up with the cash for this buy-out. No, the real problem is that the Circuit City name is tarnished. Beaten to a pulp by Best Buy and Wal-Mart, CC is struggling to reimagine itself. Last summer it fired most of its higher-performing sales staff and replaced them with unmotivated, uneducated youngsters who were more interested in punching out than making sales (I could tell you stories…). If Darwin Awards were distributed to companies, CC would be a contender.

Netflix surely is heaving a sigh of relief at this latest move in this chess game. And as for Circuit City, this may very well be the time to pass the hope bong around the corporate drum circle.

Dr “Got A Match?” Gerlich


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