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Another Hail-Mary Pass From Blockbuster

25 May, 2005 By: Holly J. Wagner

Quick! Somebody call Office Depot and have them deliver a truckload of new calculators to Blockbuster! I think all of theirs must be broken.

For one thing, they keep adding zeroes to executive compensation figures. While the profit numbers keep going down, the executive packages keep going up. There's some kind of head-scratcher there.

They also seem to be lowballing the revenue loss from supplanting late fees with restocking fees and forced sales. Or maybe when they made the initial projections, they expected to hang onto more of the forced sales.

I was about to give Blockbuster a break and write about something else this week, but then the company announced its incentive plan to get Walmart.com and Netflix DVD rental customers to switch to Blockbuster Online.

It wasn't that Blockbuster countered the Netflix image boost with its own offer, in this case two free months of online rentals and a free DVD. Big Blue would have been foolish not to capitalize on the hoopla surrounding the Netflix-Wal-Mart deal.

But at Blockbuster, the whole thing went down like a hail-Mary pass – like so many other things recently. First, we saw the announcement from Netflix and Wal-Mart. Then after pretty much every news organization in the country got excited about it, Blockbuster put out its own press release. Then later the same day, company spokespeople advised us of changes to the terms stated in it: After the switchers' two-month free trial is over, they will get Blockbuster Online's prevailing rate, not “the same price they are currently paying from either walmart.com or Netflix” like it said in the press release.

This smacks of on-the-fly decision making. Blockbuster knew the Walmart.com deal was coming because the company tried to get the partnership for itself. But the corporate leadership there is obviously too distracted with recent turmoil to notice before the press release went out that the offer was less than attractive for Netflix customers.

Maybe Blockbuster should start thinking about mobile entertainment, because it looks like the corporate decision makers are phoning it in these days.

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