Covering its bases in case the DVD rental market moves broadly online, Blockbuster Inc. is testing web-based DVD rentals with the recently named FilmCaddy.com. Although it believes DVD rentals will remain strongest in stores, “if things change, we’ll be in a position to participate” with online rentals, Blockbuster tells InternetRetailer.com.
Blockbuster recently acquired DVD Rental Central, renaming it FilmCaddy.com. But it continues to play down FilmCaddy’s association with Blockbuster while it tests the online rental market. “We’re still trying to understand how this business works,” a spokesman says. He says Blockbuster figures online DVD rentals to be a niche that will attract only about 3% of households that rent DVDs.
With FilmCaddy.com, Blockbuster is exploring a market pioneered by Netflix Inc.’s Netflix.com, which reported a 98% rise in year-over-year second-quarter revenue, to $36.4 million from $18.4 million. Wal-Mart Stores Inc. also revealed this week that it is entering the market on WalMart.com, where its monthly fee of $18.86 undercuts the $19.95 charged by Netflix by 5.5%. Other than price, Netflix and Wal-Mart offer the same deal: subscribers receive in the mail three DVDs that they can hold for an unlimited time, then return them in pre-paid mailers for a replacement. DVDs titles are sent after being picked randomly from a list of each subscriber’s preferences.
FilmCaddy is competing with service rather than price. While charging a monthly fee of $19.99, it offers a service similar to that of its competitors except that it provides subscribers with four DVDs at a time instead of three.
Blockbuster is also testing an in-store subscription program, which will allow customers to come in and choose particular titles when they’re ready to replace rented DVDs. That way customers “are not tied to what they get in the mail,” the spokesman says, adding: “We want to serve customers any way they want.”
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