Blockbuster Testing Online Game Rentals

18 Nov, 2009 By: Erik Gruenwedel

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Blockbuster has begun offering online rentals of new-release video games, including Call of Duty: Modern Warfare 2, Assassin’s Creed and New Super Mario Bros. Wii to monthly subscribers in the Seattle area as part of an expanded pilot program.

Dubbed “Games By Mail,” the program (which bowed earlier this year in Cleveland) gives Blockbuster Online members the option (for an additional $7.99 monthly charge) to rent as many games — one out at a time — as permissible under their monthly plan and have them delivered to the home.

Blockbuster Online subscribers are charged the additional monthly fee only when opting in for the program and actually renting game titles.

Game rentals for the Wii, PS2, PS3 and Xbox 360 platforms can be returned in-store (similar to Total Access) for new or discounted movie and game rentals, depending on the provisions of a subscriber’s plan.

“We hope customers will take advantage of the service and share their feedback with us so we can build on our key [findings] in Cleveland and further refine the offering in preparation for a national launch,” said Keith Morrow, chief information officer with Blockbuster.

The Dallas-based Blockbuster in February said it would enter the largely untapped $1 billion online game rental market heretofore controlled by GameFly.com, which last month filed a complaint with the United States Postal Service alleging discrimination and preferential rates and handling to Netflix and Blockbuster when dealing with DVD mailers.

Game rentals historically represent about 10-15% of total rental revenue for Blockbuster and Movie Gallery, according to Wedbush Morgan Securities in Los Angeles.

Online DVD rental pioneer Netflix does not rent video games.

Roth Capital Partners analyst Richard Ingrassia earlier this year said Blockbuster Total Access lacked sufficient marketing support (due to Blockbuster corporate liquidity problems) to capture a larger share of the potential new game-based subscriber pool.

In September, Blockbuster raised $635 million in bonds (due 2014), which Wedbush analyst Michael Pachter said “substantially” increased the company’s liquidity and stability.

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