Blockbuster touts multi-channel strategy
PHYSICAL: Retailer emphasizes advantages over Netflix, Redbox
By Cindy Spielvogel -- Video Business, 12/3/2009
DEC. 3 | PHYSICAL: Blockbuster is continuing to take its message about its “multi-channel” movie delivery strategy to an audience that hasn’t shown much appreciation for the chain: Wall St., where the company’s stock price is now trading for less than $1.
Blockbuster executive VP and chief financial officer Thomas Casey made a presentation at the Bank of America and Merrill Lynch Credit Conference today in New York, outlining the future strategy for the retailer, which pays the studios domestically “more than $1 billion a year.”
Casey emphasized that Blockbuster’s multi-channel strategy is “less capital intensive” than stores alone and has advantages over the business models of such competitors as Netflix and Redbox.
On digital delivery, Casey said that Netflix’s streaming service largely covers non-new release movies, while the Blockbuster On Demand service, which also can be accessed through partners Samsung and Tivo, is for major new releases as well.
At 1.6 million subscribers, Blockbuster’s Total Access rental-by-mail service is far below Netflix’s subscriber count, but Casey emphasized the in-store options available with Blockbuster’s offering and said the company’s new executive team has made the service more profitable, with plans to make consumers more aware of what the service offers.
On the DVD rental kiosk business, Casey said that Blockbuster’s kiosks with partner NCR could have an advantage over Redbox because that kiosk operator is dealing with uncertainty over how distribution windows will shake out, now that 20th Century Fox Home Entertainment, Universal Studios Home Entertainment and Warner Home Video are imposing a 30-day window on Redbox. Casey said if that window stays in place for the kiosk business, Blockbuster could manage the flow of product by moving new releases from stores to kiosks after the window.
Casey’s points were largely a reiteration of those made by Blockbuster chairman Jim Keyes at the Morgan Stanley Global Consumer and Retail Conference on Nov. 20.
Casey also noted that December is Blockbuster’s biggest month, and the company is particularly bullish this year because many “strong” titles will be released, with several of the key titles for the month coming from Fox, Universal and Warner, the three studios that won’t allow their new releases to go to Redbox on street date.
Regarding Blockbuster’s core but downsized bricks-and-mortar business, Casey said the company currently has about 3,500 stores domestically and is still in store-closing mode, which will result in “fewer large stores and more small stores.”
