Blockbuster dropped millions on its comeback ad campaign, centering the TV spots on its 28-day advantage over competitors Netflix and Redbox for the latest films. "Why wait 28 days for new releases?" the commercials asked. "Blockbuster has hot new releases ... 28 days before Netflix and Redbox."
Well, not quite. Today, NCR, which operates Blockbuster's thousands of kiosks nationwide, agreed to a deal with Warner Bros to get new movies 28 days after their initial DVD release. The agreement follows similar deals with 20th Century Fox and Universal Studios, which combined make up close to half of studio market share.
So much for that advantage on Redbox. Now, both Blockbuster and its fast-growing kiosk rival will offer many of the same titles at the same time.
According to NCR, delaying new releases lowers acquisition costs. This is exactly why Netflix and Redbox agreed to the 28-day window, even as Blockbuster CEO Jim Keyes touted the deals as a huge get for the struggling rental giant. In a recent interview with Fast Company Netflix's VP of communications made it very clear that the 28-day window was in no way Blockbuster's advantage.
"We actually went proactively to the studios several years ago because the 28-day model is really good for us—we recommended it," said Steve Swasey, VP of corporate communications for Netflix, who explained that the agreement helped shave off significant costs. "We're even talking to other studios about it."
That was a far cry from Keyes's description of the 28-day advantage, which, according to one film industry source, was an arrangement that Blockbuster actually had very little control over.
"Blockbuster didn't stay with new releases by choice," explained the source at the time, who is very familiar with the studio agreements with Netflix and Blockbuster. "Movie studios have Blockbuster where they want them—they know Blockbuster is not in any position to negotiate because of their financial position. The studios are getting huge payments for new releases from Blockbuster because they know the company needs them."
Blockbuster will still offer new titles through its other channels, but will it continue to sustain those costs if the 28-day head-start's traction remains "choppy"? Perhaps it's time Blockbuster update its ads: Blockbuster has hot new releases, 28 days before Netflix, Redbox, and Blockbuster Express.
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