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As you've undoubtedly heard, Blockbuster is in serious financial trouble ... I don't know that a lot of us cinephiles care since we were all driven to Netflix , Hulu and The Autuers for very specific reasons. But hey, people do rely on Blockbuster, and I'd rather people rent movies through them than never see them at all, and it's kind of handy to have it nearby so that you can finally rent Quantum of Solace after months of a Very Long Wait. It would be nice if they hung in there.

But now that they've unveiled their master plan of salvation, you probably shouldn't hold your breath. According to The Hollywood Reporter, Blockbuster plans to rescue themselves by selling movie merchandise. Some of their plans include stocking replicas of Men in Black and Top Gun sunglasses along with "a slew of other items," which hopefully include equally hot pieces of movie swag like Field of Dreams cracker jack and Jurassic Park baseball hats.

How this differs from their current business plan is perplexing since Blockbuster has always sold movie merchandise in their stores. Or at least they've always hoped to sell it, as it's usually too broken and greasy to interest discerning buyers. (In fact, that's how I came to own a little stuffed Hidalgo -- he was too cute and clean to leave to the ravages of their shelves.) And in these tough economic times, your business plan shouldn't rely on hoping people buy a t-shirt or poster from you, it should be on providing the home entertainment people are relying on. Unfortunately, Blockbuster lost sight of that a long time ago.

It's been awhile since we last heard anything about Movielink. Actually, it's been awhile since we last heard any news regarding movie download sites in general. Honestly, I had pretty much forgotten about them, despite the news earlier this year about Hollywood giving the greenlight on download-to-DVD options. But today we get a doozy of an announcement relating to the topic: Blockbuster Video is buying Movielink.com. I'm sure I'm not the only person not surprised by the decision. I've been expecting Blockbuster to do something with downloads for a few years now -- though I did think they'd develop something new, in-house. Going with Movielink seems easier, but it also brings any baggage the download site has in terms of reputation and satisfaction -- something I can't speak for since I've never tried their service. All I know is that in two years Movielink (and CinemaNow and Guba, etc.) has failed to show the world that this is the wave of the future. Part of this, I believe, is due to the high price of movie downloads. Then there's also the matter of iTunes jumping in late and stealing the show. Blockbuster will have to figure out a cheaper cost -- among other things -- if it hopes to compete.

Personally I have little interest in movie downloads, because I have little patience and a terrible attention span when it comes to watching stuff on my computer. If anything I would rather watch streaming videos on the web, and even then I prefer short stuff or segmented films (unfortunately my favorite segmented streaming movie site was not legal). Even as a longtime fan and subscriber of Netflix, I haven't yet been able to finish a whole feature on the company's new streaming, Video-on-Demand-style "Watch Now" option (and even though I don't take full advantage, I'm still disappointed that Netflix's recent price decreases caused customers' streaming hours to decrease as well). Blockbuster's purchase of Movielink is probably going to be seen as more directly competitive with this Netflix service (than with iTunes), so we'll have to see what people prefer -- streaming or download -- in the future. Blockbuster's plan for now is to continue to operate Movielink as is, but they'll also be integrating the site's technology and elements into Blockbuster.com.

What happens when your exclusive deals with two different companies are no longer compatible? This has apparently happened to The Weinstein Co. now that Blockbuster Video has chosen to expand its availability of Blu-Ray discs, making the format the single high-definition video option in most stores. TWC, which formed a shocking exclusive rental agreement with Blockbuster last fall, does not distribute its titles on Blu-Ray; the independent studio favors HD-DVD (as does Universal). Perhaps the Weinsteins will have to rethink their video distribution? At least the movies they've already released on HD-DVD will remain in Blockbuster stores, which won't be getting rid of whatever HD-DVD titles they are already renting, and through Blockbuster.com, which reportedly won't be part of the Blu-Ray 'exclusive'. In fact, Blockbuster claims they would also expand its in-store HD-DVD distribution if enough customers want them -- so this isn't exactly an exclusive deal.

Supposedly the decision was made because Blu-Ray is outselling HD-DVD titles in stores thanks especially to the popularity of the Spider-Man films and the Pirates of the Caribbean series, both of which are only available on Blu-Ray. But this supply to the demand strategy is likely going to also create demand for only Blu-Ray, since customers tend to go with what is available to them rather than what is not. Some people claim that even the online rentals will be affected because members of Blockbuster's Total Access won't be able to return HD-DVDs to stores, and so won't be interested in them as much as in Blu-Ray. But there's a good chance that Blockbuster's new lower-priced services, which aren't 'total access', will become the company's online standards and therefore customers probably won't actually care about which format they choose. Still, with the influence of Blockbuster stores and the Blu-Ray compatible Playstation, we may very well have a front-runner, if not winner, of the hi-def format race. Maybe Blu-Ray will replace DVDs by 2010 after all.

We may have the first important movie tech story of 2007: The major studios have approved new security technology for downloaded movies that are burned to DVD. Sonic Solutions Inc. has introduced their Qflix system, which adds a digital lock to the DVDs. This copy-protection lock isn't much different from the locks used on store-bought DVDs, though because it is for burned discs, it will require customers to buy a new kind of blank DVD and a new kind of DVD burner.

This could be a very big step in the movie download business, because one of the downsides so far has been that few movie sites have been given permission to offer a download-to-burn option. CinemaNow introduced such an option last summer, but it got a bad reputation. Another concern for downloaders is with the restriction of multiple burnings, but the movie download sites will likely allow for two burns, which seems in my opinion to be plenty for non-pirates.

In addition to benefiting the personal computer movie downloaders, Qflix is going to aid the in-store download kiosks that were being discussed last year. These kiosks will offer an extensive list of titles to be downloaded and burned at places like Walmart and Target.

Significant issues still exist for movie downloads, such as reasonable cost and picture quality, and until these issues are dealt with or bettered, downloaded movies are still not that appealing for mass consumption. But at least the studios are headed in the right direction.

In totally unrelated news, Blockbuster Video has shut all its stores in Peru.

More on movie downloading:

Film Clips: Direct-to-Download: The New Wave of Film Distrib?

Cinematical Seven: The Most Important Things to Happen in Film in 2006

This week Reuters has been holding a media summit in New York City, and many entertainment industry executives have not only been participating, they've been delivering some enjoyable quotes. Of particular interest to Cinematical are the statements from Regal Entertainment CEO Michael Campbell and Blockbuster CEO John Antioco. Campbell discussed the ever-threatening release window shrinkage, which he says he will continue to battle with strong measures. He claims that studios are okay to move up DVD releases for films that don't perform well at the box office, but he stands firm against even small distributors who wish to put out DVDs within eight weeks of their theatrical release. He won't give a minimum for acceptance regarding the window's time-frame, but he urges the film industry to recognize the importance of theatrical exhibition to the success of their product. Campbell also used the summit to announce that Regal has had success with their Guest Response System pagers, which are providing a solution to all the "physical battles" involving assaults with "bats, knives and guns" against cellphone users, and hopes to have them in theaters nationwide next year.

As far as the video rental business goes, Antioco said that it is a business that has reached a plateau, but is still the preferred way for consumers to see films. He is also quoted as saying that, "packaged media remains king for a long time." He claims that Blockbuster is not interested in fighting the digital alternatives (such as movie downloading), and says that it is a business they will need to be in, "for competitive reasons and for consumer reasons, to have a full-service brand." His company hasn't decided on a format for their planned download service, which might be provided through cable or satellite TV rather than computers, and they aren't ruling out any possibilities. On the subject of Blockbuster's rivalry with Netflix and the battle for the online rental market, Antioco says that, "if (Netflix CEO) Reed Hastings thinks he is going to be alone in it, I don't think he is correct."

Blockbuster Video is fighting Netflix by taking advantage of its resources, and it might be yet another act of desperation from the retailer. Blockbuster has been trying to compete with the Netflix brand, which had a head start over Blockbuster in attracting customers to online DVD renting. But, one thing Netflix doesn't have is stores, and Blockbuster has finally realized that this is an advantage they have over Netflix. Now, Blockbuster is allowing its online renters to return discs to their stores, giving customers a free in-store rental as an incentive, and also promoting the fact that this sort of return speeds up the time that customers will be sent the next movie in their online queue.

Personally, I don't have the kind of free time that I need my next movie sent to me so quickly, and with Netflix, I generally get my next disc within two days of dropping the last one in the mailbox. But, Blockbuster probably realizes that some incentives don't necessarily have to affect all customers directly in order for them to be appreciated and seem appealing. Considering that most people I know wouldn't be able to get to a Blockbuster store until the evening, I don't think that a whole lot of customers are really going to be getting their next disc more quickly every time. Regardless, Blockbuster's online service has been increasing in membership tremendously this year, so it seems their strategies are working.

More on the Blockbuster/Netflix battle:

Blockbuster Bribes Netflix Customers to Switch

Netflix Claims Blockbuster's a Copycatter

Blockbuster Files Counterclaim Suit Against Netflix