Current Events in Media

Question:

What are some current events in your industry? What is the impact of these events on the industry?

Summary:

Dish Network chairman Charlie Ergen has recently proposed that Dish look to offer online pay-TV services to relieve the cost of only providing broadcast television.  The new programming offer would not include sports channels because those are the most expensive to provide (50 percent of what customers pay goes toward delivering sports channels, while sports make up only about 20 percent of what they view).

Dish also reported that more customers have left the company, leaving about 13.9 million subscribers as of the end of September.  DirecTV brags a larger customer base, having experienced its best third quarter growth since 2004.  However, Dish's stock has gone up $0.71, and the company a 12 percent increase in revenue.

Analysis:

I find it interesting that Dish Network is looking into online TV options--especially because our group has been looking at companies that stream TV and movies online.  Dish's foray into this mode of TV providing is particularly fascinating because Dish owns Blockbuster, the company that declared bankruptcy after being beat out by Netflix, a company that has just recently begun to offer online TV/movie options.  Is Dish trying to curb the costs of providing sports channels to its customers...or is it trying to compete with Netflix, Hulu, Amazon Prime, and the other companies beginning to use the internet to deliver untraditional entertainment?  Are they providing services so similar that price will be the only factor in consumers' decisions?

Source:

http://online.wsj.com/article/SB10001424052970204190704577024023586817992.html

The Battle of Blockbuster and Netflix

QUESTION:

Comment on revenue, profit, and loss of key industry players.

SUMMARY:

We all know the rivalry between Netflix and Blockbuster. Netflix is undoubtedly the stronger contender, but for a while there (mid-2000s), it looked like Netflix and Blockbuster were neck-in-neck. Basically, Blockbuster started out as a DVD rental/retailer. It was doing pretty well; it was essentially the only one of its kind and dominated the market. In 2004, Netflix was born, and with it, the rise of DVD by mail. Now, in 2009 Blockbuster tried to jump on the bandwagon and rent out DVDs this way--by mailing them to consumers. But it was just too late. Netflix had already snatched up many of Blockbuster's old clients and created a name for itself in the movie distribution business.

In 2010, Blockbuster filed for Chapter 11 bankruptcy. Bankrupt, essentially defunct, and very sad, Blockbuster was bought by media provider giant, DISH Network. Thus, Blockbuster became an entity under DISH and no longer exists by itself as a company anymore.

OPINION:

It's hard to say whether Netflix bought about the demise of Blockbuster. Would Blockbuster still have gone bankrupt without the rise of Netflix? I think it's safe to say that it definitely wouldn't be making as much money as it was in the 1990s--but primarily due to the rise of piracy and illegal downloading on the internet.

What is most interesting to me, however, is that DISH Network acquired Blockbuster. Why would they want control over a dying company? It's still somewhat of a mystery--DISH believed it could resurrect the DVD rental store, it thought that Netflix was just a trend, it thought that it could compete price- and service-wise with the new Netflix? Regardless, DISH disregarded (or at least discounted) Blockbuster's consistent losses in revenue and decided to go ahead and take over the company. Now, Blockbuster is trying to steal Netflix's customers through Twitter campaigns and the like, but I don't actually think Blockbuster will ever be more profitable or desirable than Netflix.

SOURCES:

http://blogs.wsj.com/digits/2011/09/29/blockbuster-takes-to-twitter-after-netflix-stumbles/?KEYWORDS=blockbuster+netflix