Blockbuster Launches New Online DVD Rental Service

31-Aug-04

Blockbuster Inc. announced the launch of Blockbuster Online, a new Internet-based service that allows customers to rent unlimited DVDs by mail, up to three movies at a time, for a monthly fee of $19.99. With this service, there are no return dates or extended viewing fees, plus subscribers receive two free in-store movie rental coupons each month. The online rental service is the latest in a series of initiatives being implemented by Blockbuster as the company continues to transform itself from a neighborhood movie rental store into an ìanywhere-anytimeî entertainment destination that eventually will enable customers to rent, buy or trade movies and games, new or used, in-store and online. With nearly $280 million industry-wide in 2003, the online subscription business represents only a small percentage of the $8.2 billion U.S. movie rental industry. However, the online rental business is growing, and Blockbuster believes it has the potential to appeal to several million U.S. households. ìWe think now is the opportune time for Blockbuster to enter the online rental business, and we plan to quickly establish ourselves in this arena by aggressively marketing, pricing and combining our online program and in-store capabilities,î said Shane Evangelist, Blockbuster Vice President and General Manager of Blockbuster Online. ìVery simply, we plan on providing the best online movie rental service available. To this end, the Blockbuster Online monthly fee is currently priced below our biggest competitor for the three-out rental plan. Plus, we are offering 25,000 new release and catalog titles. We believe that all of this, combined with our marketing savvy, should help Blockbuster to develop a substantial share of the online rental business by the end of next year.î In a first step designed to integrate its online offering with the Blockbuster store network, as well as appeal to the 40 percent of current online renters who continue to rent at a retailing establishment, Blockbuster Online will offer subscribers two free in-store movie rental coupons each month. in late May 2004, Blockbuster launched its store-based movie subscription program, the Blockbuster Movie Pass, nationwide. Blockbuster plans to combine its online and store-based subscription programs in 2005. ìThe full integration of our online and in-store programs planned for next year will enable us to provide our customers - old and new alike - with unmatched convenience, service, selection and value,î said Evangelist. ìIf a customer is in our store and wants to return a movie they rented online, weíll be able to accommodate them. If a member rents primarily in-store, but wants a hard-to-find title we donít typically carry in store, theyíll be able to go online and get it. Itís a matter of maximizing convenience and choice. ìIt will be difficult for any store-based or online retailer to replicate our business model because weíll be able to leverage our extensive U.S. store network as distribution points, which should significantly expand our 25,000 title inventory, allow for next-day delivery capability and maximize convenience for our customers - all while enhancing our operating margins and furthering our market leadership.î To reach and attract Internet users to the new online offering, Blockbuster Online has formed marketing alliances with two of the leading Internet service providers - MSN and AOL. These alliances will allow Blockbuster Online to reach approximately 75 percent of the U.S. Internet audience. Initially, MSN and AOL will promote the Blockbuster Online service through banner ads and promotional links. However, within months, Blockbuster Online users will be able to conveniently add and manage their movie queue from MSN and AOL. This is the first in a series of moves by Blockbuster Online to give customers the ability to access their movie queue from multiple locations. Consumers can logon to www.Blockbuster.com to sign up for a free two-week trial of the three-movie-out plan from Blockbuster Online. Following are specific details about the new Blockbuster Online rental service:--Blockbuster Online is currently available for a low monthly fee of $19.99, giving customers unlimited DVD rentals, up to three out at a time, plus two free in-store movie rental coupons per month. --Blockbuster Online subscribers create and maintain a personal ìqueueî - a list of movie selections - on Blockbusterís Web site (www.Blockbuster.com). --Blockbuster Online will pull the first three available movies in a subscriberís queue and send them to the subscriberís home. All shipping is free.When a Blockbuster Online subscriber is finished with a movie, he or she returns it in a self-addressed, postage-paid envelope provided by Blockbuster. --Once a movie is returned, Blockbuster will ship the next available DVD from the subscriberís queue.--Subscribers can rent unlimited DVD movies - with three out at a time - and keep them as long as they want, with no extended viewing fees.--For last-minute ìgotta have it nowî rentals, subscribers can use their two free movie rental coupons, delivered electronically each month, at participating Blockbuster stores nationwide. A separate in-store membership is required. --Blockbuster in-store membership rules and rental terms will apply. --Consumers can also choose an option that allows them to have five DVDs out at a time for $29.99 or eight DVDs out at a time for just $39.99.For additional details, visit www.Blockbuster.com.The company may be accessed worldwide at www.Blockbuster.com.

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