More SBUX-LGF insights

I've read over Mr. Munarriz's article a few times, and I still am not seeing a huge advantage for Starbucks in this partnership. I see a fairly large risk.

• "Just as family entertainment projects flock to McDonald's and Burger King for kids'-meal promotions..."

Yes, but Starbucks does not cater to kids. I don't want it to sound like Starbucks is on a different tier than other fast-food establishments, but it sort of is. I go to a Starbucks store for a nice cup of coffee. I take my coffee very seriously, and immensely enjoy drinking that first sip in quiet comfort. I wouldn't expect the same aura of relaxation within a McDonald's. Kids have much too much excitement and energy in them, especially at the prospect of a McDonald's toy or Burger King watch. This is something Starbucks is currently void of. And I'm not complaining.

Plus, why make the comparison to Burger King and McDonald's at all? These two examples started out as fast-food establishments, and have only recently expanded to include gourmet coffees. Starbucks, first and foremost, is a coffee shop. Sure, they too have expanded into food items, which usually consist of baked goods - muffins, scones, and the like. But can you honestly say that because these 3 establishments currently serve similar items (food and gourmet coffee) that they're automatically in the same category? It's an awfully broad category.

• "From its Hear coffeehouse concept, to its listening kiosks in some Seattle stores, to its own channel on XM Satellite Radio, the company has used its hip vibe to cultivate an air of musical authority."

Musical authority? True, Starbucks does indeed have it's own satellite radio channel. But nowadays, who doesn't? On Sirius Satellite Radio, Elvis, Howard Stern, and Martha Stewart all have channels. Are they musical authorities? Perhaps Elvis is...

Also, am I getting this right? Does Mr. Munarriz suggest musical authority is achieved by having listening kiosks and a radio channel? Some McDonald's locations actually have DVD kiosks where customers can rent newly released DVDs for $1 per night (plus tax). McDonald's is halfway there to becoming a movie authority. It just needs a TV-movie channel and then MCD and SBUX are practically comparable.

• "If sales are good, who knows how quickly the company's film rack will grow? Since a disc purchase is unlikely to sway a java junkie out of ordering a cup of coffee as well, the sale will be purely incremental. As impressive as the company's same-store sales have been over the years, Akeelah provides a little more ammo to make next year even stronger."

Exactly what ammo does Akeelah provide? It makes the assumption that people would want to purchase their DVDs at a Starbucks. Unless Starbucks discounts the DVD heavily, how does it fare against low-cost carriers, such as Wal-Mart or Amazon.com? You know Starbucks isn't going to sell the DVD at a discount. Does it sell much of anything at a discount?

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In search of additional answers, I downloaded the official press release for the announcement. Here are some highlights:

• Starbucks' CEO stated, "Over the past year, we viewed countless films and spoke with numerous studios in pursuit of finding the perfect film...[Our customers] can look forward to us introducing them to the movie in a fun, experiential way - not the way movies have traditionally been marketed by other retailers or quick service restaurants."
• The president of Starbucks Entertainment continues, "Given the success we've experienced with music, this is a logical extension to our entertainment strategy...Our goal is always to bring a sense of discovery to our customers while maintaining and enhancing the trust they have in us."

So Starbucks is planning a large-scale invasion of the media world, while purposely distancing themselves from the 'quick service restaurants'. (I'm happy that the press release mitigates my concerns about Starbucks turning into a kids-meal playground). That distance from quick service restaurants can turn out to be a huge plus. But for Starbucks' sake, I hope someone has taken into consideration the effect of low-cost DVD carriers. The only thing that could stunt their DVD sales before it begins, is selling them at the suggested retail price.

Please Starbucks, be smarter than I think you are.