It seems Blockbuster Inc. backed off from acquiring its competitor Hollywood Video. Instead, Hollywood (number two in home rentals) will merge with Movie Gallery (number three). Their combined company will be a greater rival for Blockbuster (number one).
Apparently, Blockbuster thought they wouldn’t get the go ahead by the FTC due to antitrust concerns. So, they just dropped the pursuit. I consider this a case of the system succeeding. Blockbuster will now have greater competition from Hollywood/Movie Gallery. And they are already being forced to give customers more value due to the success of Netflix. I think everyone wins out on this one.
Blockbuster, for a long time, made the rules. They kept increasing prices without hesitation. Now, they are offering unlimited monthly memberships and online memberships. If this competition keeps up maybe we’ll see more improvements. Competition should breed better deals. And one company with an impossible lead is not competition. Of course, there are rare instances of success in such situations (Apple). Either way, we can only benefit from the upcoming rental rivalry.