Keyes: Blockbuster will take leadership role
Expand product services with new technology, kiosks
By Paul Sweeting -- Video Business, 7/2/2008
JULY 2 | With digital technology wreaking fundamental change to the home entertainment business, Jim Keyes worries that the industry lacks the kind of leadership at the retail level that can drive product innovation and new business models to meet emerging consumer needs.
Keyes
But one year into his post as chairman and CEO of Blockbuster Inc., he sees an opportunity to fill the void.
“The industry has really lacked leadership on the retail side,” Keyes told VB in an interview on the eve of his anniversary. “We are the closest to the customer. If change is going to happen, Blockbuster will have to take a leadership role. We put a stake in the ground with Blu-ray; we’re working very aggressively with the studios on the rollout of that format. But there are other areas where I also think we can take a leadership role.”
One of those areas—perhaps the biggest—is the convergence of media content and entertainment devices, at both the retail and services levels.
That goal was behind Blockbuster’s controversial bid to acquire electronics chain Circuit City.
Blockbuster withdrew the bid Tuesday, after completing preliminary due diligence, citing unfavorable “market conditions.”
But Keyes hasn’t given up on the idea.
“We don’t actually need to acquire Circuit City to pursue our strategy,” he said, prior to Blockbuster withdrawing its bid. “We can use technology to expand our product offerings, including adding consumer electronics.”
Blockbuster is testing the idea of arming its in-store sales people with tablet PCs connected to the Internet to assist customers in purchasing products not found in the store, such as entertainment devices.
“You can interrupt the customer as they're standing in front of a [download] kiosk, or a small display, and make an Internet-assisted sale by helping them through the transaction and ringing up the sale on the spot,” he said. “The product would be delivered by mail or overnight to the store for pick-up the next day.”
Blockbuster also plans to leverage technology to improve its traditional DVD rental business.
“People tend to forget how powerful technology can be in making bricks-and-mortar more efficient,” he said. “If we can leverage technology to better predict how many copies [of a movie] we need to stay in stock on a Friday night in a particular location, we can do a better job of satisfying the customer.”
Blockbuster’s boldest bid to leverage digital technology in its stores, however, is its planned download kiosks, which will allow customers to transfer movies to a portable device in under a minute.
“There’s a lot of emphasis on getting content from the Internet to the TV, but we have a little different perspective,” Keyes said. “The game was won in music by portability. It was the ease of download to a portable device that won the game for Apple. But if you look at their video solution, it’s not very effective. Downloading video is still not easy and it takes too long. That undercuts portability, which I think is going to be very important.”
According to Keyes, in-store kiosks, or remote-sited units in airports or other locations where portability is at a premium, can help bridge the gap by making the process of getting movies onto hand-held devices quick and easy.
The kiosks also can be useful for expanding the selection of titles available in a Blockbuster store without having to stock additional DVDs.
The retailer plans to begin selling portable storage devices and docking stations that connect to a customer’s TV set, allowing movies to be downloaded from a kiosk and watched at home.
“When I look at the way people talk about how digital services will be bought and sold in the future, I just can't imagine what they're thinking,” Keyes said. “Not everything is going to be accessed directly online and downloaded. When you buy a device for a particular service, doesn't it make more sense for that service to be embedded in the device? Some things are going to be accessed from kiosks or on memory cards. There will be a lot of different ways to access content. Some of it will be direct to the consumer, some will be through some kind of retail location. All of it will be digital but it will come in a lot of forms.”
For Blockbuster to effectively lead the industry, however, others, including the studios will have to follow—still an uncertain proposition.
“Some studios have been very supportive of what we’re trying to do, but like with the investment community, that’s mixed with a lot of skepticism,” Keyes acknowledged. “What I try to tell them is that if somebody doesn't do this, iTunes will do it for them.”
