In a follow-up to my previous post that touched on the major transformation from ‘store to web’ for big-box retailer Circuit City and their sagging offline sales, comes news today of a $1 Billion offer for Circuit City by Blockbuster. Much in the same way that Microsoft missed the boat on search which opened the door for Google, Blockbuster has similarly missed the boat on online video rentals and they’ve been chasing Netflix ever since.
Will merging with Circuit City save Blockbuster’s business / brand? Blockbuster appears to be moving toward a ‘hardware-based’ strategy that would likely see them launch a set-top content delivery box ie, think Apple TV. This strategy would explain the interest in merging with an electronics retailer.
“The combination of Blockbuster and Circuit City will result in an $18 billion retail enterprise uniquely positioned for the convergence of media content and electronic devices,” wrote Blockbuster’s Keyes this morning. “We would seek to differentiate products in both Blockbuster and Circuit City stores by offering exclusive content and content-enabled devices. Both companies would benefit from complementary products, marketing, management strengths, technology and distribution and the resulting synergies would significantly improve consolidated financial performance.”
In Canada, the online video rental business is suffering from a lack of competition and choice for consumers. It’s not a mature business yet by any means and over time that will change as new players, partnerships and brands enter the Canadian online video rental market.