Blockbuster versus Netflix: Blockbuster Just Scored!

Okay, it's election day. I should probably post some comment on the elections. At the moment, I have nothing to say. Politics in the U.S.A. has become as corrupt as politics in Nigeria, so what is there to say? We sold the White House to the oil companies, Halliburton, and the Saudis. We're in hock to the Chinese leadership and pandering to the hand full of corporations that have come to dominate the U.S. media. Democracy just isn't important in America. It was important, even when this country was half slave society it was important. It was important through Jim Crow, lynchings, and the suppression of the human rights of women. But it just doesn't seem all that important anymore, at least not in a good deal of the country. (It remains important in New England, by the way, as well as in much of the West Coast, especially Oregon, where smoke and mirrors doesn't have quite the same effect it does in the interior of the nation and especially in the old slave states, but since when has the "silent majority" followed their New England compatriots.)

And at least part of the reason that it isn't important anymore is that the means to brainwash people has become far more sophisticated and pervasive than it ever was in the past. The hypnotic power of the television and the motion picture are unparalleled, and the complexity of the imagery generated to rearrange our thought processes is without precedent. In the U.S. today, and increasingly around the world the U.S. dominated entertainment industry displaces reality with beautifully constructed illusions embedded with powerful ideas about how the world works, who we are as human beings, and the processes by which time and space and everything inside of it, including ourselves, are transformed. While we watch (and think about what we are trained to think about -- from who the next president will be to whether our home team will make it to the Super Bowl or whether Madonna should have adopted that African baby), wealth and power are increasingly concentrated under the control of a tiny elite. So rather than talk about this reconfiguration of global economic, political and cultural power (or the environmental disaster that it seems to be producing), let's talk about the entertainment industry, at least a small part of it -- a segment of the merchanting side of it.

The creators of Netflix came up with a brilliant idea (brilliant is often simple) for using the Internet to get entertainment into living rooms and generate cash flow for themselves: allow individuals to pay a subscription fee and have DVDs mailed to their home addresses. Each time a DVD was returned, a new DVD would be sent to them. In a world where people are increasingly alienated from one another and movies are the prime escape, this not only provided access to a huge library of motion pictures, documentaries, etc. but also allowed people to access them without needing to "interface" with other human beings in person. Perfect! Fits the times. Blockbuster, being the big behemoth in the movie rental industry, was slow to react, but eventually joined the competitive fray with its own online service. However, Blockbuster failed to make use of its existing infrastructure of brick and mortar stores, allowing Netflix to remain the best choice for those who wanted to rent DVDs online. They competed on price briefly, but that was only a short lived battle, ended when Carl Icahn went into a tizzy about Blockbuster not maximizing shareholder value or some such (Icahn is clueless about this industry, by the way). But now Blockbuster has finally figured out how to use its existing advantages. The company has decided to fully (or more fully) integrate its online and brick and mortar services, allowing renters to return their DVDs directly to the stores and immediately receive new DVDs. For a lot of reasons, this gives Blockbuster a competitive lead over Netflix for the first time. In other words, if you haven't already sold your Netflix stock, you might at least want to reevaluate.