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Blockbuster May Subscribe to New Rental Theory in Stores Nationwide

17 Oct, 2002 By: Stephanie Prange

Blockbuster Inc. has quietly crept into the online DVD rental business and is using it as research and development on a possible launch of a brick-and-mortar subscription service nationwide.

Blockbuster spokesperson Karen Raskopf today confirmed Video Store Magazine's earlier report that Big Blue owns DVDRentalCentral.com, a service similar to Netflix. She said the site is part of the company's research and development in “niche markets.”

“We remain skeptical about the size of the market for DVD online rental,” she said. “We think going forward the answer is the store-based subscription model.”

Blockbuster has been testing the Freedom Pass subscription plan in select markets and has just added its fifth city, Salt Lake City, Utah, with 100 stores in the area. The chain is testing various pricing and other models to “optimize revenue per customer,” Raskopf said, but executives are “very excited about it.”

“Customer satisfaction is unbelievably high,” she said.

She said the chain would make a decision about a possible nationwide rollout of the subscription plan in the beginning of next year.

She said chain research show customers want to complete a rental transaction within four hours – something precluded by the mail-order model online.

Blockbuster's DVDRentalCentral.com has a trade name of On-Line Subscription Services Inc., and has Blockbuster executives at its helm. Blockbuster president and COO Nigel Travis is president and CEO of On-Line Subscription Services and Big Blue EVP, general counsel and EVP of business development Ed Stead is secretary, according to corporate filings.

DVDRentalCentral.com offers subscriptions for a monthly fee of $19.95, the same subscription price as the Netflix service. The service lets customers rent as many DVDs as they want, as many as four at a time, without paying postage. Normal mailing time is two to three days, according to the site.

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