Piracy and pricing to blame
Blockbuster Video is ending its commercial operations in Spain, and one of the culprits is piracy.Vidtailer will shutter its 86 owned stores in Spain by May 15. Company blames its exit from Spain on a severe drop in the rental DVD market. Underlying causes are the alarming growth in piracy and the maintenance of two-tiered pricing structures for rental and sell-through DVD/video products despite the compression of release windows between rental and retail. The penetration of piracy in Spain’s DVD/video market has increased spectacularly, from 5% in 2002 to 60% of DVD commercial products viewed in Spanish households in 2004, according to a Blockbuster source. In 2004, Blockbuster Video Espana lost E5.5 million ($6.5 million), 65% more than in 2003. Company estimated larger losses for 2005. Staff layoffs will affect some 700 employees. Starting March 27, Blockbuster stores in Spain will begin to sell off products, including DVDs, vidgames and video consoles. Blockbuster opened its first Spanish shop in 1991, and owned or supplied as many as 105 stores over the years. Closure of Blockbuster Espana doesn’t affect 13 Blockbuster franchises operating in Spain’s Canary Islands.