NEW RELEASES
New Blockbuster CEO Jim Keyes yesterday laid out a strategic vision that aims to transition the company from a rental service to a retail one by stocking its stores with devices like mobile phones and video game consoles, while adding digital downloading kiosks that feed into these technologies.
Speaking to reporters in closed-door sessions at New York’s Palace Hotel after Blockbuster’s annual analyst day, Keyes said the first thing he realized during his initial four months on the job was that Blockbuster had stopped changing.
“Now it is more important than ever to keep changing,” Keyes said.
Indeed, Keyes said there are between five and 10 years of life left in the traditional DVD rental business and Blockbuster must begin transitioning now if it wants to be prepared.
Uppermost on the former 7-Eleven CEO’s agenda is turning Blockbuster customers into buyers instead of renters. The company currently averages about $2,000 per-store, per-day, in rental revenue but only $300 per-store, per-day, in sales. Keyes’ goal is to balance those figures.
While the transition takes shape, Keyes said Blockbuster would begin testing different price points for rentals. He noted that the average price for a rental at Blockbuster has actually dropped to $2.79 this year from $3.60 in 2004.
Blockbuster’s success or failure is often viewed through the lens of the performance of online rival Netflix.
“We’re trying to change the game so that we can use all our strengths against their limited strengths,” said Keyes, who concedes that Netflix’s advantage is that it has a bigger share of the online-to-mailbox delivery market. “If mail [delivery] peters out, they have no place to go.”
Blockbuster recently merged download service Movielink.com with mail-delivery service Blockbuster.com and introduced a tiered-pricing service for its “Total Access” program that limits the amount of movies customers can get for free.
Other initiatives under consideration include: pre-loading mobile devices sold in stores with exclusive Blockbuster content including Weinstein Co. movies, and striking partnerships with cable providers that would deliver Blockbuster movies directly to consumers’ DVRs like TiVo’s deal with Amazon.com.