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Thursday, 21 April 2011

Every Little Helps

Tesco has just gobbled up 80% of Blinkbox and has positioned itself as the main rival to Amazon (new owners of LoveFilm) for control of the UK video on demand market. Here's an article in today's Guardian that discusses how the move might effect the future of TV and film distribution.

Tesco is the original one stop shop in the UK - the place that people go to buy newspapers, bread, fresh fruit, barbecues, wine, clothes, toasters, meat, fish, insurance, and DVDs. Tesco's business model is based on getting consumers to buy everything from one place - theirs. It has been incredibly successful, today in Britain £1 out of every £7 spent in a shop, is spent in a Tesco. Only about 20 or 30 years ago you would probably have bought those 11 products in 11 different shops, from 11 different companies. That is a definition of convergence for you right there.

Over the last decade Tesco and other supermarkets have been rapidly expanding into selling Books, DVDs and CDs. Alongside the huge sales growth of online retail giants (biggest of which Amazon) this has created a pincer movement, that has crushed specialist High Street retailers who have been unable to compete with the scale and low costs of these gargantuan operators. Our Price, Virgin Megastores/Zavvi and Tower Records have gone to the wall since 2004 and HMV and Waterstones are in rapid decline and look like they are probably on their last legs too.

One of the most interesting aspects of Tesco's move into the VoD market is that it clearly demonstrates the new players entering the TV and film industries that are emerging as likely big-hitters of the future. How the changing ownership and methods of TV and film distribution will effect production and patterns of exchange, only time will tell...

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