Blockbuster spending $35 million in Q1 on marketing campaign, CEO says
Building on its strong momentum of recent weeks, Blockbuster Inc. will spend about $35 million this quarter to continue promoting its new Total Access program, which provides online customers with the option of getting additional DVDs in stores at no extra charge, chairman and CEO John Antioco says. It’s also planning more multi-channel renting options, he adds.
The $35 million in marketing funds is in addition to the $20 million Blockbuster spent to launch its Total Access program on Nov. 1. The program brought in more than 700,000 new online customers between Nov. 1 and Dec. 31, increasing Blockbuster’s online customer base to over 2 million from 1.5 million, Antioco told analysts last week. “It cost $20 million in extra expenses to launch Total Access, but it was absolutely worth it, with 700,000 new subscribers,” he says.
Antioco says he expects the growth to continue throughout this year, and that he wouldn’t be surprised to enter 2008 with close to 4 million subscribers as Blockbuster tries to catch up to rival Netflix Inc., which has about 6 million online subscribers.
The $35 million marketing campaign will focus largely on TV commercials designed to tell viewers that Blockbuster’s Total Access program offers something Netflix can’t by giving online subscribers the ability to exchange DVDs in stores for faster turnaround, instead of returning them only through the mail. The program also grants subscribers use of additional in-store DVDs at no extra charge.
“We intend to close the gap with Netflix significantly,” Antioco says. “We’ll make a substantial claim that our online service is as good as theirs, but that we also offer the stores option.” Blockbuster is No. 70 in the Internet Retailer Top 500 Guide; Netflix is No. 21.
Blockbuster also plans to introduce online services this year designed to provide more multi-channel options to store and online customers. Store customers, for example, will be allowed to use online services such as rating movies and getting movie recommendations without paying for an online subscription, Antioco says. Blockbuster.com will also begin this year to let store customers check online for the availability of particular DVDs in local stores.
Netflix co-founder CEO and Reed Hastings will deliver the June 6 keynote address, The Transformation of the Movie Rental Industry, at the Internet Retailer Conference & Exhibition, June 4-7 in San Jose.
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