Blockbuster on Brink of Chapter 11; Movie Studios Rejoice.

Published Wednesday, June 16, 2010 @ 8:23 am

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There is no shortage of bright, shiny signals alerting us that the world of technology is changing faster than we can measure. At one time, shopping on the Internet was considered a decision that could put your entire financial wherewithal at risk. Now, if a company doesn’t have an online shopping cart, it’s outdated. Cell phone cameras were thought of as intrusive, unnecessary accessories that no one is going to care to own. Today, a palm-sized phone has auto-zoom, manual focus and 5-megapixel imaging.

The latest sign of technology’s preponderance is the presence of Blockbuster video on the ever-crowded edge of corporate bankruptcy.

The once de-facto choice of entertainment for family movie nights and awkward first dates everywhere, the home-video stalwart has been muscled out of its marketplace by the Internet. Having already taken out Hollywood video, online movie services have successfully capitalized on America’s lust for convenience. As scary as it is to admit, we have now reached a point where leaving the house to return a movie has become too cumbersome. We are now officially a culture obsessed with remaining insular and micro-local. The more we can get without having to see the sun, the better.

Pardon the digression.

Many years ago, the movie industry launched a very major, very public tirade against film piracy. The ads touting the evils of stealing a studio’s work played as preamble before major releases and took up full color pages in entertainment publications. While there is no question that bootlegging and streaming direct from a studio server is indeed stealing, the legalities of the issue were not what concerned the studio. The amount of money piracy costs studios is only a fraction of what they claim it to be. Most pure cinema lovers would much rather pay $10 to see a film in its all glory on the big screen instead of paying $6 for a blurry, poorly filmed replica. And, until recently, the majority of Americans didn’t have the bandwidth or the screen quality (hello HD!) to make downloading a stolen film worthwhile. And those who could and then sell it were taking only fractions of cents on the whole from the box office.

Instead, the studios real concern was that they did not want to get beat to market. The threats of penalties and jail time simply provided a convenient way to delay their competition until things fell into place.

Today, some movies make it to the consumer market only weeks after theatrical release. Netflix, Blockbuster and iTunes all offer legitimate, direct downloads of movies for the same amount they once cost to physically pick from the shelf. Cable and satellite television service providers offer “on-demand” services that play a recent release with the push of a button and an easy add-on to your monthly bill.

At one time, Blockbuster and Hollywood video lived and died by the sale of VHS and DVD player manufacturing. After all, the entities were useless without one another. Walk into a Wal-Mart or Best Buy today and you’ll notice that Samsung, Sony and Panasonic are much more friendly with your local Internet service provider than your neighborhood video store, as more video players are connecting, via WiFi of course, to the Web to download movies directly to your television.

You see, there was really no concern with what piracy was costing the folks at Warner Brothers, Paramount and MGM. Ultimately, the pirate market was simply one they couldn’t control. But it’s not an issue anymore because technology has caught up to their plans. They now know how to make money on Web-based content.

Now, about those video cell phones …

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