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Blockbuster Bolsters Online Rental Service Offerings

Posted on Thursday, July 26th, 2007 6:43 PM

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After yesterday's post about Netflix reducing their membership plan pricing, now we see an announcement from competitor Blockbuster that they are expanding their online offering as well. Curiously, the price points sound very familiar...

The full press release appears below, but here are the high points:

  • Cheapest plan is $4.99/month for 1 DVD at a time and maximum of two rentals (online only, no in-store exchanges).
  • If you want to have the ability to exchange movies in-store, the least expensive plan is $9.99/month for 1 DVD at a time with 2 in-store exchanges.
  • The highest priced plan is $24.99/month for 3 DVD's at a time and unlimited in-store exchanges.
  • Movies can now be exchanged in-store for game rentals as well as movies in 5,000 of the chain's 8,000 stores.
  • Blockbuster online has more than 70,000 titles (as opposed to Netflix's 80,000+ selection)

While I think that offering in-store exchanges is an advantage for Blockbuster, that advantage is diminished by the fact that the movie you picked up has to be returned to that store. You can't use the postage-paid envelope that didn't get used to mail back the in-store movie, so now you have the hassle of returning a movie (most likely under the same time restrictions as if you had paid for the rental).

It will be interesting to see what's next in this tug of war for customers between Netflix and Blockbuster!

Press Release

Blockbuster Announces Expanded Online Subscription Offerings

New Range of Plans For Online Subscribers as Low as $4.99 Per Month Subscribers Can Now Enjoy Discounted Game Rentals

DALLAS, July 26 /PRNewswire-FirstCall/ -- Blockbuster Inc. (NYSE: BBI, BBI.B) today announced that the Company is introducing a wider range of subscription plans including BLOCKBUSTER Total Access Premium(TM), BLOCKBUSTER Total Access(TM), and BLOCKBUSTER(R) By Mail.

The new subscription plans are now available to all current and new subscribers to Blockbuster's online rental service with pricing as low as $4.99 a month. In addition, most of Blockbuster's online subscribers will now have the option of exchanging their online movies for discounted in-store game rentals as well as free in-store movie rentals at more than 5,000 participating BLOCKBUSTER(R) locations.

"Blockbuster's wide array of online rental offerings continues to offer subscribers the best value in the marketplace. With multiple subscription plans to choose from, we're giving our customers the ability to choose the option that's right for them," said Jim Keyes, Blockbuster Chairman and CEO. "We want to give consumers the most convenient access to media entertainment, whether that's through our stores or by mail, and are dedicated to doing that with flexible plans and pricing."

For subscribers interested in an online-only plan, BLOCKBUSTER By Mail subscriptions start as low as $4.99 per month and go up to $16.99 for the three-out unlimited movie rental plan. BLOCKBUSTER By Mail subscribers will also now have the option of exchanging their online rentals at participating stores for $1.99 discounted in-store movie rentals.

For subscribers who want both in-store and online movie rentals, BLOCKBUSTER Total Access plans start as low as $7.99 per month and offer a fixed number of free in-store movie or discounted game rentals per month. The Company's three-out unlimited rental plan offers five free in-store movie or discounted game exchanges per month for $17.99. Subscribers to the Total Access plan who want in-store rentals in excess of their monthly free exchange benefit can take advantage of the $1.99 discounted movie rental exchange offer.

For the most frequent renters, the Company's BLOCKBUSTER Total Access Premium plans let subscribers rent an unlimited number of movies by mail with unlimited free in-store movie exchanges or discounted in-store game rentals. Subscription plans for BLOCKBUSTER Total Access Premium start at $16.99.

Consumers can log on to http://www.blockbuster.com to sign up for a free two-week trial of either BLOCKBUSTER Total Access Premium, BLOCKBUSTER Total Access or BLOCKBUSTER By Mail.

With more than 70,000 titles to choose from online, Blockbuster delivers DVDs right to subscribers' mailboxes in pre-paid postage return envelopes. There are no due dates or late fees with movies rented from Blockbuster's online rental service. In-store movie rentals are still subject to store rental terms, including due dates, and must be returned to the store from which they were rented. As of July 1, 2007, the Company had approximately 3.6 million total online subscribers.

About Blockbuster Inc.

Blockbuster Inc. (NYSE: BBI, BBI.B) is a leading global provider of in-home movie and game entertainment, with approximately 8,000 stores throughout the Americas, Europe, Asia and Australia. The company may be accessed worldwide at http://www.blockbuster.com.

This press release includes forward-looking statements, including those related to our expanded online subscription offerings and our expectations with respect to those offerings, including with respect to our continued ability to offer consumers the best value in the marketplace. These forward-looking statements are based on management's current intent, belief, expectations, estimates and projections regarding our company and our industry. These statements are not guarantees of future performance and involve risks, uncertainties, assumptions and other factors that are difficult to predict. Therefore, actual results may vary materially from what is expressed in or indicated by the forward-looking statements. Factors that may cause actual results to vary materially include, among others: (1) consumer appeal of our existing and planned product and service offerings, and the related impact of competitor pricing and product and service offerings; (2) overall industry performance and the accuracy of our estimates and judgments regarding trends impacting the home video industry; (3) our ability to obtain favorable terms from suppliers, including on such matters as copy depth and uses of product; (4) the studios' dependence on revenues generated from retail home video and their related determinations with respect to pricing and the timing of distribution of their product; (5) the variability in consumer appeal of the movie titles and games software released for rental and sale; (6) our ability to comply with operating and financial restrictions and covenants in our debt agreements and any adverse publicity relating thereto; (7) our ability to respond to changing consumer preferences, including with respect to new technologies and alternative methods of content delivery, and to effectively adjust our offerings if and as necessary; (8) the extent and timing of our continued investment of incremental operating expenses and capital expenditures to continue to develop and implement our initiatives and our corresponding ability to effectively control overall operating expenses and capital expenditures; (9) our ability to effectively and timely prioritize and implement our initiatives and to timely implement and maintain the necessary information technology systems and infrastructure to support our initiatives; (10) our ability to capitalize on anticipated industry consolidation; (11) the application and impact of future accounting policies or interpretations of existing accounting policies; (12) the impact of developments affecting our outstanding and any future litigation and claims against us; (13) a change in the composition of our key management and any shift in strategy in connection therewith; and (14) other factors, as described in our filings with the Securities and Exchange Commission, including the factors discussed under the heading "Risk Factors" in our annual report on Form 10-K for the year ended December 31, 2006 and under the heading "Disclosure Regarding Forward-Looking Information" in our quarterly report on Form 10-Q for the quarter ended April 1, 2007. This cautionary statement is provided pursuant to Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The forward-looking statements in this release are made only as of the date hereof and we undertake no obligation to update publicly any forward-looking statement for any reason, even if new information becomes available or other events occur in the future.

Source: Blockbuster Inc.

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