Less then a week after the company denied that they are trying to sell off their international properties, we’ve seen the company abandon their affiliate program in the UK and now Digitimes is reporting that they’ve sold off their Taiwanese Blockbuster locations to Taiwan based Webs-TV.
Webs-TV wouldn’t confirm or deny that a deal has taken place, but Digitimes has said that the acquisition will be for all of their stores in Taiwan, as well as the rights to use Blockbuster’s name and trademark in the future.
The good news for Blockbuster is that they’ll have one less division bleeding losses at an alarming rate for the company, but the bad news is that next year is the year of the Pig and Blockbuster may get slaughtered as the loss of revenue from their international operations continues to impact their flexibility in a rapidly changing industry.
While I’m sure that Blockbuster will likely point to issues with piracy as their motivation for leaving Taiwan, I see their struggles in Taiwan as an early indicator of some of the challenges that Blockbuster will face in the US markets as the digital revolution makes it way past the DVD and through the net.
While DVDs and the video stores still have some life left in them, there is little doubt that media is moving away from the stand alone video store business model and towards direct distribution over the internet. Will Blockbuster be able to innovate fast enough to stay in the game? Only time will tell, but thus far they’ve invested in Cinema Now and have spent a tremendous amount of energy in promoting their own online competition to Netflix, yet so far they’ve gained relatively little traction from these moves. The company has done a good job at cutting costs over the last year, but at some point it will become increasingly difficult for the company to cut costs fast enough to keep pace with the number of video stores going into the red.
While an early exit out of Taiwan may help focus Blockbuster’s business on the US markets, I question what Blockbuster plans on doing once the same pressures that they face overseas begin to happen domestically.