Blockbuster to Expand Online Rental Program Nationwide

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Emboldened by the results of an ongoing test, Blockbuster Inc. will roll out its online rental program later this year in all stores nationwide.


Soon, Blockbuster members will be able to select movie videos and DVDs online and then collect them at the store. The program will involve an estimated 4,300 company-owned stores, followed by 700 franchisees.


"Online rentals works quite nicely with our mission of being the leading provider of multiple forms of rentable home entertainment," said Liz Greene, vice president of public relations at Blockbuster, Dallas.


The effort is part of Viacom-owned Blockbuster's new media platform to drive foot traffic to stores more efficiently.


Currently live in the Austin, TX, and Denver, CO, markets -- both high Internet usage areas -- the online rental program requires Blockbuster members to sign up and choose up to three preferred stores.


Next, members can browse movies and games available for rent, select the titles, pay online and pick up the rentals from the store.


"You'll have access to the inventory, and for some reason if [the store] don't have it available, they'll either e-mail you a confirmation or they'll call you within two hours to let you know if they don't have it," Greene said.


There is no extra charge for the online rental service, nor will consumers get a special discount for renting online at www.blockbuster.com/rental.


"I think there are customers that like the added convenience of being able to determine what movie they want to rent before having to go into the store," Greene said.


"It's something our customers have been asking for or are interested in, and we wanted to be able to provide the service to them," she said. "Will all of our customers use it? Probably not. But we do think this is something that there's definitely a demand for."


But Blockbuster's online rental program is still short of the ultimate convenience: renting online for home delivery.


In this area, Blockbuster will encounter a rash of competition from Internet companies like Netflix.com, Kozmo.com, Cinemanow, netdvdrentals.com, Café DVD, Movietrak, Vidtrac and Digibuster Media.


Take Netflix, for example. The Los Gatos, CA, company calls itself the world's largest online movie rental store with 250,000 subscribers and a library of more than 9,000 DVDs.


For a flat fee of $19.95 a month, Netflix members can rent up to three movies at a time for delivery via the U.S. Postal Service. The movies can be held for any length of time, and there are no late fees.


Netflix's DVDs come straight from the movie studios, which split revenue on online rentals. This arrangement offers Netflix plentiful inventory at competitive prices.


Blockbuster stresses its intention, for the moment, to use the Internet to serve its established brick-and-mortar channel.


"There's in-store signage [in the test markets] and there's special signage for express checkout for those that come in to pick up the videos," Greene said. "There's a special area that they go to pick up their videos."


"It all goes back to supporting our store, which is what the goal of our new media division is," she added.


Besides online rental, the Blockbuster new media division includes a new on-demand service that delivers movies via broadband TV in four markets.


Even here, Blockbuster may have a tough time. Netflix is said to be preparing to launch its own broadband service. The strategy is to first acquire a large customer base and allow users to download movies through TV.


Greene is not fazed by the challenges. She said that Blockbuster stores would fully support new media initiatives, especially the online rental program as it gains market acceptance.


"There's a Blockbuster within 10 minutes of 70 percent of the population," Greene said, "so we feel that it's a viable business, it's something that our customers want."
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