Blockbuster will triple stores with Blu-ray

High-def discs, display kiosks to be in almost 4,900 U.S. stores

By Danny King -- Video Business, 4/10/2008

APRIL 10 | Blockbuster will almost triple the number of stores that carry Blu-ray discs and will add Blu-ray display kiosks to almost all of its U.S. company-owned stores in an effort to boost revenue from high-definition disc rentals.

The company declined to confirm or deny a report that it was developing a set-top box that allows customers to order videos that can be streamed directly to their TVs.

Blockbuster will both carry Blu-ray discs and place kiosks in almost all of its approximately 4,900 U.S. stores, up from the 1,700 stores that carried Blu-ray as of last July. The kiosks, which will include 42-inch HDTVs with Sony PlayStation 3 consoles playing Blu-ray movies, will be provided by studios, spokesman Randy Hargrove said today.

“We believe Blockbuster is perfectly positioned to drive consumer adoption of this next-generation DVD format and to become the customer’s headquarters when it comes to renting or buying Blu-ray movies,” said David Podeschi, senior VP of merchandising, distribution and logistics at Blockbuster.

The retailer is counting on the emergence of Blu-ray as the winner of the next-generation format war to be a key part of the chain’s continued turnaround. Last month, the company said fourth-quarter earnings quadrupled as Blockbuster edged closer to profitability for its online-subscription program by raising prices and slowed its decline in same-store sales. Blu-ray’s format-war victory provides “a big upside,” CEO James Keyes said in a March 6 earnings conference call.

Studios began adding the kiosks to about 1,000 Blockbuster stores in February as part of a broad-based marketing effort to capitalize on Toshiba’s decision that month to discontinue its competing HD DVD format. Sony began working with retailers such as Best Buy to offer discounts to customers who bought both HDTVs and either Blu-ray discs or PlayStation 3 game titles, while Sony Pictures Home Entertainment said it would release more than 100 Blu-ray titles this year, up 54% from 2007.

Blockbuster also might be close to an announcement that it will develop set-top boxes that will allow video-streaming directly to TVs, the Hollywood Reporter said Thursday. The service, similar to one that movie-rental-by-mail leader Netflix is developing with LG Electronics, would be an offshoot of the Movielink service Blockbuster bought last year, allowing movie downloads to personal computers, the newspaper reported.

“We’re talking to numerous companies and vendors about products, services, alliances and initiatives that can help us achieve our mission to transform Blockbuster into a company that provides access to media content across multiple channels—from our stores, by mail, through kiosks, through downloading, and through portable content-enabled devices,” Blockbuster spokeswoman Karen Raskopf said, declining to give further specifics.