March 28, 2008, 12:00 AM

Blockbuster turns to the web for new growth

Blockbuster wants to be more than a DVD rental company, and its turning more to the web to build out its multi-channel offerings including online movie downloads through in-store kiosks as well as its web site.

As Blockbuster Inc. continues to slug it out with rival Netflix Inc., it’s staking its claims to differentiation and its future on a bid to be a multi-channel retailer and not just a DVD rental company. And in repositioning to a multi-platform strategy, the Internet and e-commerce figure to play a big role.

A recent overhaul to sets the stage for multi-channel offerings, CEO Jim Keyes is telling analysts this spring. For example, Keyes says that customers will be able to purchase movie downloads from by the end of the second quarter. The company also plans to experiment with digital downloads at kiosks in stores.

Blockbuster’s $6.6 million acquisition last year of Movielink LLC, which has an inventory of thousands of movies and TV shows, will facilitate the company’s ability to provide digital content to a variety of formats, including personal computers, portable devices, and, eventually, home TV screens.

Blockbuster also is using a marketing deal with Yahoo to generate more sales online and in stores, and it has announced plans to partner with Paramount Pictures and MTV Networks to offer exclusive digital content.

The company expects to spend some $130 million this year on capital projects including $40 million on information technology and web infrastructure upgrades.

“As new entertainment technologies emerge, consumer options multiply,” Keyes notes. “All of these initiatives underscore our determination to position Blockbuster as the only provider of media content across all platforms-in-store, by mail and by digital download.”

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