Believe it or not there are a ton of investors who want to own their own kiosk, but no one in the marketplace has created an affordable high quality solution with a national brand to satisfy this demand. Let outside investors fund the kiosk expansion while Blockbuster clips pure gross profit margins by licensing their name. Second, in order to compete with Netflix's long tail and with the $1 kiosk rentals, Blockbuster needs to be able to guarantee movie availability for at least 50,000 films at their store locations. Without taking over empty Circuit City locations, the only way they could squeeze that much entertainment into their current square footage is to adopt a burn on demand business model.

Let customers reserve films online and then pick them up or let them wait at the store while you're burning the DVD. They can still keep inventory on hand, but put a server and a dozen PCs into every store and let customers wait 5 minutes if they want the film that they came to the store to actually see. As leases expire, they could move exclusive DVD burning stations into places Safeway, Long's or Ralphs. Just like Starbucks has been able to lease a small amount of square footage in grocery stores to sell coffee, there's no reason why Blockbuster couldn't do the same and then burn movies while customers shopped.

I'm not sure why they haven't adopted either solution, but doing nothing won't solve their problems. It may be convenient to blame declines in revenue on a weak lineup of titles, but the reality is that consumers are moving past the DVD and unless Blockbuster can improve the value proposition (kiosks) or offer consumers a more satisfying store experience that they can't get elsewhere (unlimited supply and instant gratification), they won't be relevant in the future.