Blockbuster wants in on the electronics business. First the struggling movie rentals company wants to sell a branded set-top box for downloading movies. Now it wants to buy an entire consumer electronics retail chain. Blockbuster made a buyout offer to Circuit City, which isn't doing so hot itself.
The notion of the combined companies is causing many a Wall Street pundit to scratch his head. But Blockbuster chief executive Jim Keys believes a tie-up makes perfect sense.
He imagines Circuit City selling media players pre-loaded with movies and music sold at Blockbuster stores, and upselling subscriptions to Blockbuster's content the way Circuit City sales reps already sell extended warranties.
At Blockbuster, you'd find a small selection of consumer electronics products for sale via Circuit City — perhaps a few HDTVs, Blu-ray players, and TiVo boxes.
Would consumers go ga-ga for more subscription service pitches and a smaller selection of goods at electronics shops? Its hard to imagine. But one bystander is sure to love this deal: Netflix. While Blockbuster and Circuit City are busy negotiating and merging, Netflix can pull ahead — far ahead — in the race for digital delivery of movies. —Rachel Rosmarin
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