Blockbuster Inc. is transforming its business model from movie rental stores into a diversified digital entertainment and e-commerce company, CEO James Keyes is telling Wall Street analysts.
In the second quarter, Blockbuster, No. 35 in the Internet Retailer Top 500 Guide, completed the integration of Movelink.com into Blockbuster.com, which now gives customers the option to download movies from a library of more than 10,000 titles priced from $1.99 to more than $3. Blockbuster also recently updated its e-commerce site with new payment applications from PayPal Inc. and added a Blu-Ray profile tool that gives users the ability to track new releases and check in-stock availability.
“The new Blockbuster.com now provides our customers the flexibility to buy, rent, download or subscribe,” Keyes told analysts on the company’s recent second quarter earnings call. “While we are still in the early stages of integration, we are adding some new features, including a new player for faster movie downloads and since our content is downloaded, we’ll be adding a hot sync button to our web site to make the movement of our content to portable players easier and more convenient.”
Blockbuster also is moving forward with a plan to deploy kiosks in its stores. The company in August inked a deal with NCR Corp., which develops self-service technology, to deploy kiosks in 50 stores. Initially the kiosks will offer only DVD rentals, but Blockbuster has ambitious plans to deploy 10,000 kiosks in its stores and elsewhere within 18 months. Eventually Blockbuster wants to update the kiosks with e-commerce and digital entertainment capability. “Our vending strategy provides a perfect bridge between physical and digital delivery,” Keyes told analysts. “With NCR’s advanced technology, these machines will dispense a wide variety of DVDs but will also be positioned to offer digital downloading in the future and all under the Blockbuster brand.”
Blockbuster, which in July ended a $1.3 billion takeover deal for Circuit City Stores Inc., No. 16 in the Internet Retailer Top 500 Guide, is aggressively pursuing new business development. But the retailer also is working to become profitable. In the second quarter, Blockbuster posted a net loss of $41.9 million on sales of $1.3 billion vs. a net loss of $31.4 million on sales of $1.26 billion in the prior year. Blockbuster, which posted e-commerce revenue of $526.4 million in 2007, no longer breaks out quarterly web sales in its financial filings.
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