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Thursday, 19 July 2007
United Kingdom
In the UK, Blockbuster has been providing a version of online rentals since October 2002 with its "Pay Per Rent" service. This is more like a postal version of store rentals than the traditional online DVD rental subscription model, with per-rental prices of £3.50-£4.50, with a rental period of 5 nights (usually Monday-to-Friday, not including postal delivery times), and late fees (£0.70-0.90 per disc).
In May 2004, Blockbuster also introduced a conventional online subscription service. The unlimited 3-disc plan is £14.99/month.
Blockbuster's online service has continued to make headway against its more heavily promoted rival LoveFilm.com, earning accolades in 2006 as the best DVD rental service in an head-to-head test against other similar services by UK magazine Web User, as well as being judged as having the fastest turnaround of titles by DVD rental comparison site ChooseDVDRental
In the UK, Blockbuster has been providing a version of online rentals since October 2002 with its "Pay Per Rent" service. This is more like a postal version of store rentals than the traditional online DVD rental subscription model, with per-rental prices of £3.50-£4.50, with a rental period of 5 nights (usually Monday-to-Friday, not including postal delivery times), and late fees (£0.70-0.90 per disc).
In May 2004, Blockbuster also introduced a conventional online subscription service. The unlimited 3-disc plan is £14.99/month.
Blockbuster's online service has continued to make headway against its more heavily promoted rival LoveFilm.com, earning accolades in 2006 as the best DVD rental service in an head-to-head test against other similar services by UK magazine Web User, as well as being judged as having the fastest turnaround of titles by DVD rental comparison site ChooseDVDRental
Blockbuster Online
In August 2004, Blockbuster introduced an online DVD rental service in the U.S. to compete with the established market leader, NetFlix. The initial price of the standard three-disc plan was $19.95, which was below the NetFlix price (which had increased from $19.95 to $21.99 in June).
In October, NetFlix reduced its own 3-disc price to $17.99; Blockbuster responded by reducing its price to $17.49. Blockbuster made a further reduction to $14.99 in December, and apparently guaranteed this price to existing customers until January 2006. In August 2005, Blockbuster raised their prices for new customers to match the NetFlix level of USD$17.99. The above prices are for the standard three-disc plan; other plans vary from $5.99 for one disc (limit 2 per month), $7.99 for one disc (limit 3 per month),$9.99 for one disc (unlimited), and $14.99 for 2 discs (unlimited).
Blockbuster currently offers bonus coupons to all of its online customers. These coupons are used in-store. Customers on any plan receive one coupon per month to rent a free DVD or game from a brick-and-mortar location. Customers who signed up for the three-disc plan prior to the introduction of Total Access received four coupons per month (one per week) which could be used for movie rentals in store. An option no longer available to new customers is the three disc plan that offered only two coupons per month. These could be used for either movie or video game rentals. Older members of the three disc plan had the option to continue this plan, or switch to the newer four coupon plan. With the new option to exchange the online mailers for free in-store rentals, the coupons no longer became necessary. However, older members still receive two coupons per month good for either game or movie rentals for the same price that members with one coupon pay. Online customer service will not allow older members to revert to this plan after responding to Blockbuster advertising intended to drive them to a new plan. When a customer contacts the online customer service to report a problem that caused a delay, the response usually includes an additional in-store bonus coupon, which is good for 30 days.
Blockbuster also offers a special promotional discount to new customers or customers who canceled their online program before the introduction of Total Access. The first two weeks of online service are free for a three-disc plan. There is also an elusive promotional discount for the first month of online service for free for a three-disc plan that is available on several online coupon websites. After the promotional period, customers have the option to retain, cancel, or modify their subscription packages.
Blockbuster's U.S. online operation started with around 10 warehouses; further expansions every year have brought that number to 36 (5 more to open in late 2007), plus 1400+ stores in the Blockbuster Online network. Most Blockbuster independent franchises do not honor the Total Access program. The company had 1.5 million subscribers at the end of the third quarter of 2006 (as compared to 5.6 million for NetFlix).[7] Blockbuster's move to follow the business pattern with its online rentals as was established by NetFlix prompted NetFlix to sue Blockbuster for infringement of patent. Blockbuster counter sued NetFlix with a counterclaim alleging deceptive practices with its patent which it alleges was designed to maintain an illegal monopoly.
In August 2004, Blockbuster introduced an online DVD rental service in the U.S. to compete with the established market leader, NetFlix. The initial price of the standard three-disc plan was $19.95, which was below the NetFlix price (which had increased from $19.95 to $21.99 in June).
In October, NetFlix reduced its own 3-disc price to $17.99; Blockbuster responded by reducing its price to $17.49. Blockbuster made a further reduction to $14.99 in December, and apparently guaranteed this price to existing customers until January 2006. In August 2005, Blockbuster raised their prices for new customers to match the NetFlix level of USD$17.99. The above prices are for the standard three-disc plan; other plans vary from $5.99 for one disc (limit 2 per month), $7.99 for one disc (limit 3 per month),$9.99 for one disc (unlimited), and $14.99 for 2 discs (unlimited).
Blockbuster currently offers bonus coupons to all of its online customers. These coupons are used in-store. Customers on any plan receive one coupon per month to rent a free DVD or game from a brick-and-mortar location. Customers who signed up for the three-disc plan prior to the introduction of Total Access received four coupons per month (one per week) which could be used for movie rentals in store. An option no longer available to new customers is the three disc plan that offered only two coupons per month. These could be used for either movie or video game rentals. Older members of the three disc plan had the option to continue this plan, or switch to the newer four coupon plan. With the new option to exchange the online mailers for free in-store rentals, the coupons no longer became necessary. However, older members still receive two coupons per month good for either game or movie rentals for the same price that members with one coupon pay. Online customer service will not allow older members to revert to this plan after responding to Blockbuster advertising intended to drive them to a new plan. When a customer contacts the online customer service to report a problem that caused a delay, the response usually includes an additional in-store bonus coupon, which is good for 30 days.
Blockbuster also offers a special promotional discount to new customers or customers who canceled their online program before the introduction of Total Access. The first two weeks of online service are free for a three-disc plan. There is also an elusive promotional discount for the first month of online service for free for a three-disc plan that is available on several online coupon websites. After the promotional period, customers have the option to retain, cancel, or modify their subscription packages.
Blockbuster's U.S. online operation started with around 10 warehouses; further expansions every year have brought that number to 36 (5 more to open in late 2007), plus 1400+ stores in the Blockbuster Online network. Most Blockbuster independent franchises do not honor the Total Access program. The company had 1.5 million subscribers at the end of the third quarter of 2006 (as compared to 5.6 million for NetFlix).[7] Blockbuster's move to follow the business pattern with its online rentals as was established by NetFlix prompted NetFlix to sue Blockbuster for infringement of patent. Blockbuster counter sued NetFlix with a counterclaim alleging deceptive practices with its patent which it alleges was designed to maintain an illegal monopoly.
Retail operations
A Blockbuster store in Mexico
Blockbuster has many locations in over thirty countries, including the United States, Canada, Mexico, Central America, South America, Argentina, Uruguay, Ireland, Puerto Rico, UK, Australia, New Zealand, Israel, Peru, Brazil, Chile, Taiwan, Italy, Denmark, Venezuela and Colombia.
They currently have 5192 stores across the U.S. International stores (operating under Blockbuster and other brands) totaled 3,291, in 2004 including 426 in Canada, 897 in Britain, and 408 in Australia. It has been claimed that there are more than 43 million U.S. households with Blockbuster memberships.
The company has an Irish subsidiary, Xtravision, which does not operate under the Blockbuster brand name.
A Blockbuster store in Mexico
Blockbuster has many locations in over thirty countries, including the United States, Canada, Mexico, Central America, South America, Argentina, Uruguay, Ireland, Puerto Rico, UK, Australia, New Zealand, Israel, Peru, Brazil, Chile, Taiwan, Italy, Denmark, Venezuela and Colombia.
They currently have 5192 stores across the U.S. International stores (operating under Blockbuster and other brands) totaled 3,291, in 2004 including 426 in Canada, 897 in Britain, and 408 in Australia. It has been claimed that there are more than 43 million U.S. households with Blockbuster memberships.
The company has an Irish subsidiary, Xtravision, which does not operate under the Blockbuster brand name.
Quantity and selection of titles
Blockbuster (like most other rental stores) tends to stock more copies of new movies than older releases, in order to capitalize on heavy consumer demand for new release titles. Titles that are more than one year past their initial release date are stored as "Blockbuster Favorite" (non-new release) titles. DVD non-new releases are not officially branded as Blockbuster Favorites, but are often referred in that manner anyway. Typically only 1-4 rental copies are retained past the first year of release. The large volume of new release copies are typically sold after the initial renting rush. These copies are usually sold "previously viewed" for around $10-15, sometimes as low as $3.99. Most Blockbuster locations also accept trade-ins of used DVDs, which are sold alongside the existing stock of previously rented movies in order to create a more robust selection of titles for sale.
Representing themselves as a family-friendly chain, Blockbuster has always banned pornography (except in the New Zealand market), though carrying R-rated and unrated films, including a large number of "soft porn" titles (including Red Shoe Diaries which was distributed exclusively by Blockbuster in a now expired agreement with Showtime). Blockbuster requires employees to check ID and does not allow rental of titles with a rating over R to children under 17 unless their parents have specifically allowed it through a family account.
Blockbuster has been the handle retailer for The Weinstein Company movies since January 1, 2007.
On June 19, 2007, Blockbuster made an announcement to choose Blu-Ray over HD-DVD rental format to rent out in a majority of its stores after a pilot program launched in late 2006, in which Blockbuster offered selected titles for rental and sale in 250 stores. Blockbuster now plans to stock Blu-ray only in 1450 of its stores, but says the 250 stores with the HD-DVD movies will be kept on the shelf.
Blockbuster (like most other rental stores) tends to stock more copies of new movies than older releases, in order to capitalize on heavy consumer demand for new release titles. Titles that are more than one year past their initial release date are stored as "Blockbuster Favorite" (non-new release) titles. DVD non-new releases are not officially branded as Blockbuster Favorites, but are often referred in that manner anyway. Typically only 1-4 rental copies are retained past the first year of release. The large volume of new release copies are typically sold after the initial renting rush. These copies are usually sold "previously viewed" for around $10-15, sometimes as low as $3.99. Most Blockbuster locations also accept trade-ins of used DVDs, which are sold alongside the existing stock of previously rented movies in order to create a more robust selection of titles for sale.
Representing themselves as a family-friendly chain, Blockbuster has always banned pornography (except in the New Zealand market), though carrying R-rated and unrated films, including a large number of "soft porn" titles (including Red Shoe Diaries which was distributed exclusively by Blockbuster in a now expired agreement with Showtime). Blockbuster requires employees to check ID and does not allow rental of titles with a rating over R to children under 17 unless their parents have specifically allowed it through a family account.
Blockbuster has been the handle retailer for The Weinstein Company movies since January 1, 2007.
On June 19, 2007, Blockbuster made an announcement to choose Blu-Ray over HD-DVD rental format to rent out in a majority of its stores after a pilot program launched in late 2006, in which Blockbuster offered selected titles for rental and sale in 250 stores. Blockbuster now plans to stock Blu-ray only in 1450 of its stores, but says the 250 stores with the HD-DVD movies will be kept on the shelf.
Elimination of late fees
On January 1, 2005 Blockbuster introduced their "Life after late fees" program. Instead of late fees, which Blockbuster called Extended Viewing Fees (see infra), Blockbuster allows a seven day window after the due date, wherein the item may be returned without charge. After this point, Blockbuster automatically converts the rental to a sale and charges the customer the sale price (initially the retail price, it changes to the previously viewed price if the store offers the movie as previously viewed product.) of the unreturned item. As of August 22, 2006, Blockbuster discontinued the rental-to-sale policy that had customers pay for the price of the movie minus the rental fee. Now, the rental fee will not be deducted from the sale. Customers may then return the item within 30 days after the automatic sale date to have this charge refunded, less a "restocking fee" of $1.25. The initial due date of the rental item and the automatic sale date are both printed on the receipt beneath the title of the rental item.
On January 1, 2005 Blockbuster introduced their "Life after late fees" program. Instead of late fees, which Blockbuster called Extended Viewing Fees (see infra), Blockbuster allows a seven day window after the due date, wherein the item may be returned without charge. After this point, Blockbuster automatically converts the rental to a sale and charges the customer the sale price (initially the retail price, it changes to the previously viewed price if the store offers the movie as previously viewed product.) of the unreturned item. As of August 22, 2006, Blockbuster discontinued the rental-to-sale policy that had customers pay for the price of the movie minus the rental fee. Now, the rental fee will not be deducted from the sale. Customers may then return the item within 30 days after the automatic sale date to have this charge refunded, less a "restocking fee" of $1.25. The initial due date of the rental item and the automatic sale date are both printed on the receipt beneath the title of the rental item.
Marketing
Tippett-produced television commercial for Blockbuster, with Carl and Ray.
One of Blockbuster's most well known advertising campaigns was launched during the 2002 Super Bowl. It starred the voices of Jim Belushi and James Woods, as a rabbit and a guinea pig in a pet shop, located across the road from a Blockbuster store. The first campaign ended in 2003. The Carl and Ray campaign started again in 2007 starting with a commercial in the first quarter of Super Bowl XLI.
Tippett-produced television commercial for Blockbuster, with Carl and Ray.
One of Blockbuster's most well known advertising campaigns was launched during the 2002 Super Bowl. It starred the voices of Jim Belushi and James Woods, as a rabbit and a guinea pig in a pet shop, located across the road from a Blockbuster store. The first campaign ended in 2003. The Carl and Ray campaign started again in 2007 starting with a commercial in the first quarter of Super Bowl XLI.
Movie Pass and Game Pass
Blockbuster also started a Movie Pass program, which operates similarly to NetFlix or its own mail-in rental service. Blockbuster members pay a flat fee to rent as many movies as the member would like. The in-store Movie Pass has the advantages of both speed and volume. A customer may swap movies twice a day or more, if he/she so desires. Moreover, the Movie Pass allows a customer to obtain a movie on-demand, rather than waiting the 1-2 days for an online rental. On the other hand, the selection is limited compared to mail-in programs, and the in-store Movie Pass is typically more expensive. When Extended Viewing Fees were still charged, the Movie Pass program enabled a customer to keep their movies for whatever period they wished without having to pay Extended Viewing Fees.
Blockbuster also offers a Game Pass, which works like the newer movie pass, except that it allows customers to swap games instead of movies.
Blockbuster also started a Movie Pass program, which operates similarly to NetFlix or its own mail-in rental service. Blockbuster members pay a flat fee to rent as many movies as the member would like. The in-store Movie Pass has the advantages of both speed and volume. A customer may swap movies twice a day or more, if he/she so desires. Moreover, the Movie Pass allows a customer to obtain a movie on-demand, rather than waiting the 1-2 days for an online rental. On the other hand, the selection is limited compared to mail-in programs, and the in-store Movie Pass is typically more expensive. When Extended Viewing Fees were still charged, the Movie Pass program enabled a customer to keep their movies for whatever period they wished without having to pay Extended Viewing Fees.
Blockbuster also offers a Game Pass, which works like the newer movie pass, except that it allows customers to swap games instead of movies.
Blockbuster Rewards
Blockbuster Rewards is an optional, paid membership program that began in 1999. For a yearly fee (usually $9.95 tax-free), members can obtain free rentals through their Rewards membership by the following means:
1. Once a month, customers receive a coupon for a non-New Release movie.
2. For every five paid rentals within one calendar month, the customer receives one New Release or video game rental free. When they rent five, they get one rental free (which may include New Release movies or games). Only two free rentals can be accumulated each calendar month using the rent five, get one method.
3.On Monday through Wednesday Blockbuster Rewards customers can receive a free non-new release movie rental for each paid rental.
Within Canada, the Blockbuster Rewards Membership is assembled slightly differently. For one, the monthly non-New Release movie coupon has been discontinued. The "Rent Five, Get One Free" promotion applies only to New Release and Video Game paid rentals, but there is no limit on how many one may accumulate within a calendar month.
The promotion where a customer can receive a free non-New Release movie with the paid rental of a New Release movie is only available to "Gold Rewards," and the window of opportunity is extended to Sunday through Thursday. The "Gold Rewards" membership is a free upgrade on the normal "Blue Rewards" membership, and is given to any Rewards customer accounts that accumulate 100 paid new release rentals within one year. If this volume of rentals is maintained, the annual fee is waived, and the customer continues to be a "Gold Rewards" member without having to renew.
The Rewards program is designed to provide a discount to high-volume customers, mostly those who watch the latest releases. Because the cost is relatively low (about the cost of two rentals) and its effective time is so long (one year), it also caters to those with sporadic rental patterns. Moreover, unlike the Movie Pass program or an online program, no credit card is required to purchase Rewards, so it can serve as a volume discount to those without credit cards.
Blockbuster Rewards is an optional, paid membership program that began in 1999. For a yearly fee (usually $9.95 tax-free), members can obtain free rentals through their Rewards membership by the following means:
1. Once a month, customers receive a coupon for a non-New Release movie.
2. For every five paid rentals within one calendar month, the customer receives one New Release or video game rental free. When they rent five, they get one rental free (which may include New Release movies or games). Only two free rentals can be accumulated each calendar month using the rent five, get one method.
3.On Monday through Wednesday Blockbuster Rewards customers can receive a free non-new release movie rental for each paid rental.
Within Canada, the Blockbuster Rewards Membership is assembled slightly differently. For one, the monthly non-New Release movie coupon has been discontinued. The "Rent Five, Get One Free" promotion applies only to New Release and Video Game paid rentals, but there is no limit on how many one may accumulate within a calendar month.
The promotion where a customer can receive a free non-New Release movie with the paid rental of a New Release movie is only available to "Gold Rewards," and the window of opportunity is extended to Sunday through Thursday. The "Gold Rewards" membership is a free upgrade on the normal "Blue Rewards" membership, and is given to any Rewards customer accounts that accumulate 100 paid new release rentals within one year. If this volume of rentals is maintained, the annual fee is waived, and the customer continues to be a "Gold Rewards" member without having to renew.
The Rewards program is designed to provide a discount to high-volume customers, mostly those who watch the latest releases. Because the cost is relatively low (about the cost of two rentals) and its effective time is so long (one year), it also caters to those with sporadic rental patterns. Moreover, unlike the Movie Pass program or an online program, no credit card is required to purchase Rewards, so it can serve as a volume discount to those without credit cards.
Business model
The standard business model for video rental stores was that they would pay a large flat fee per video, approximately US$65, and have unlimited rentals for the lifetime of the cassette itself. It was Sumner Redstone, whose Viacom conglomerate then owned Blockbuster, who personally pioneered a new revenue-sharing arrangement for video, in the mid-1990s. Blockbuster obtained videos for little cost and kept 60 percent rental fee, paying the other 40 percent to the studio, and reporting rental information through Rentrak. What Blockbuster got out of the deal, besides a lower initial price, was that movies were not available for sale during an initial release period, at least at an affordable price point - customers either had to rent, wait, or buy the film on tape at the much higher MSRP price targeted at other rental chains and film enthusiasts, at that time then between $70-$100 before the end of the initial release period.
The standard business model for video rental stores was that they would pay a large flat fee per video, approximately US$65, and have unlimited rentals for the lifetime of the cassette itself. It was Sumner Redstone, whose Viacom conglomerate then owned Blockbuster, who personally pioneered a new revenue-sharing arrangement for video, in the mid-1990s. Blockbuster obtained videos for little cost and kept 60 percent rental fee, paying the other 40 percent to the studio, and reporting rental information through Rentrak. What Blockbuster got out of the deal, besides a lower initial price, was that movies were not available for sale during an initial release period, at least at an affordable price point - customers either had to rent, wait, or buy the film on tape at the much higher MSRP price targeted at other rental chains and film enthusiasts, at that time then between $70-$100 before the end of the initial release period.
History
Blockbuster began in Dallas, Texas when it opened its first store on October 19, 1985. The founder of the company was 29-year-old David P. Cook. Cook grew the business and brought it public before handing the reins to CEO Joe Mitchell, who quickly grew it into a multi-billion dollar corporation. The company became a part of Viacom Inc. in 1994 at a price of $8.4 billion. During the 1990s Blockbuster bought out their major UK rival Ritz Video and changed the name of all the stores to their own, which made them the number one video rental store in the country by a wide margin.
In 1996, the Blockbuster Entertainment Corporation (as it was then known) was renamed Blockbuster, Inc. and the retail stores, Blockbuster. Older stores have not changed.
In 2002, Blockbuster acquired Movie Trading Company, a Dallas chain that buys, sells, and trades movies and games, to study potential business models for DVD and game trading. Also that year, they acquired Gamestation, a 64 store UK computer and console games retailer chain.
Blockbuster separated from Viacom in 2004 and launched Game Pass nationwide. Online DVD subscription was introduced on Blockbuster.com (aka Blockbuster Online). Blockbuster also rolled out its Game Rush store-in-store concept to approximately 450 domestic company-operated stores. Blockbuster began game and DVD trading in select US stores too. Overall, Blockbuster has lost significant amounts of money in recent years: $1.6 billion in 2002, almost $1.0 billion in 2003, and $1.2 billion in 2004.
As of February 2006, the company had a market value of under $500 million.
On July 2, 2007, the company named James W. Keyes (former president and CEO of 7-Eleven) as the new chairman and CEO. Keyes had worked at the convenience store chain for 21 years ubtil 2005, when it was sold to Seven & I Holdings Co. He replaced John F. Antioco who had been leading Blockbuster since 1997. Additionally, Blockbuster Inc. lifted the ban on using debit cards to secure rentals of movies and games in excess of the per-visit check out limit. Customers who were once required to use a major credit card are now free to use their debit card.
Blockbuster began in Dallas, Texas when it opened its first store on October 19, 1985. The founder of the company was 29-year-old David P. Cook. Cook grew the business and brought it public before handing the reins to CEO Joe Mitchell, who quickly grew it into a multi-billion dollar corporation. The company became a part of Viacom Inc. in 1994 at a price of $8.4 billion. During the 1990s Blockbuster bought out their major UK rival Ritz Video and changed the name of all the stores to their own, which made them the number one video rental store in the country by a wide margin.
In 1996, the Blockbuster Entertainment Corporation (as it was then known) was renamed Blockbuster, Inc. and the retail stores, Blockbuster. Older stores have not changed.
In 2002, Blockbuster acquired Movie Trading Company, a Dallas chain that buys, sells, and trades movies and games, to study potential business models for DVD and game trading. Also that year, they acquired Gamestation, a 64 store UK computer and console games retailer chain.
Blockbuster separated from Viacom in 2004 and launched Game Pass nationwide. Online DVD subscription was introduced on Blockbuster.com (aka Blockbuster Online). Blockbuster also rolled out its Game Rush store-in-store concept to approximately 450 domestic company-operated stores. Blockbuster began game and DVD trading in select US stores too. Overall, Blockbuster has lost significant amounts of money in recent years: $1.6 billion in 2002, almost $1.0 billion in 2003, and $1.2 billion in 2004.
As of February 2006, the company had a market value of under $500 million.
On July 2, 2007, the company named James W. Keyes (former president and CEO of 7-Eleven) as the new chairman and CEO. Keyes had worked at the convenience store chain for 21 years ubtil 2005, when it was sold to Seven & I Holdings Co. He replaced John F. Antioco who had been leading Blockbuster since 1997. Additionally, Blockbuster Inc. lifted the ban on using debit cards to secure rentals of movies and games in excess of the per-visit check out limit. Customers who were once required to use a major credit card are now free to use their debit card.
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