February 28, 2006, 12:00 AM

Blockbuster Online: Drop that mouse and get in here

Blockbuster Inc. is upping the number of movies that online customers can obtain at stores as part of their subscription. In February, the movie and video game rental giant doubled the number of free movie rentals redeemable at bricks-and-mortar stores that Blockbuster Online subscribers receive.

Blockbuster Inc. is upping the number of movies that online customers can obtain at stores as part of their subscription. Last month, the movie and video game rental giant doubled the number of free movie rentals redeemable at bricks-and-mortar stores that Blockbuster Online subscribers receive.

Subscribers now can get one free in-store movie rental every week instead of the two per month previously offered. The two-per-month free rentals can be redeemed at the same time; the one-per-week free rentals can only be redeemed one at a time. Subscribers have the option to stay with the two free rentals program or migrate to the four. The free in-store rentals do not affect the number of online rentals a customer can have out at the same time.

Blockbuster Online customers generally do not rent movies purely online-they do make trips to the stores, says Shane Evangelist, senior vice president and general manager. “Customers clearly enjoy the convenience of online rentals, but also spontaneous in-store rentals,” Evangelist says. “About 40% of the program’s coupons are redeemed every month, and 70% of online customers have used coupons at some point. So at least 70% of subscribers still enjoy going to a store. Our coupon program is bricks-and-clicks played out to the fullest extent.”

The expanded coupon program is the result of consumer research by the company. Blockbuster Online found that subscribers liked the option of increased in-store rentals, even if it meant they could rent only one per week, Evangelist says. The coupon program also was designed to drive in-store transactions, which can include sales of DVDs, candy, magazines and other products, he adds.

Blockbuster Online subscription programs offer unlimited online rentals; DVDs are mailed to customers, who return them by mail. The one-out program, which means a customer can have only one film rented at a time, costs $9.99 per month. The four free in-store movie rentals are almost equivalent to the $17.99 monthly fee for the three-out plan. Subscribers have access to more than 50,000 titles.

The coupon program differentiates Blockbuster Online from rival Netflix-Netflix cannot make such an offer since it has no stores. So the coupon program clearly offers Blockbuster customers more rentals, says Michael Pachter, research analyst at financial services and investment firm Wedbush Morgan Securities Inc. However, when it comes to benefiting the customer, it might not add a lot of value, he adds.

“Think of this as a convenience. If you have 40-year Old Virgin, Crash and Mr. and Mrs. Smith from the online store, but your wife wants to see Cinderella Man, you can print out a coupon and pick it up at a store,” Pachter says. “But how often will this really happen? Most people will just move Cinderella Man up in the online queue and get it the next week, when they return one of the other films.”

 

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