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Blockbuster Officially Launches Online Rental Site

12 Aug, 2004 By: Holly J. Wagner

Blockbuster launched its Blockbuster Online rental service Aug. 11, challenging Netflix at the anticipated price of $19.99 for a three-out plan that also gives subscribers two free in-store movie rental coupons each month.

"We think now is the opportune time for Blockbuster to enter the online rental business, and we plan to quickly establish ourselves in this arena by aggressively marketing, pricing and combining our online program and in-store capabilities," said Shane Evangelist, Blockbuster VP and GM of Blockbuster Online. "Very simply, we plan on providing the best online movie rental service available. To this end, the Blockbuster Online monthly fee is currently priced below our biggest competitor for the three-out rental plan. Plus, we are offering 25,000 new release and catalog titles. We believe that all of this, combined with our marketing savvy, should help Blockbuster to develop a substantial share of the online rental business by the end of next year."

Blockbuster formed marketing alliances with Internet service providers MSN and AOL to let Blockbuster promote to up to 75 percent of the U.S. Internet audience, at first with banner ads and promotional links. Within months, the partners will let subscribers add and manage their movie queue from MSN and AOL. Blockbuster promises other steps to let customers access their movie queue from multiple locations in the future.

Blockbuster launched its store-based Movie Pass subscription program nationwide in May and debuted the beta site for online rentals in mid-July. The chain plans to combine its online and store-based subscription programs next year.

After that happens, "It will be difficult for any store-based or online retailer to replicate our business model because we'll be able to leverage our extensive U.S. store network as distribution points, which should significantly expand our 25,000 title inventory, allow for next-day delivery capability and maximize convenience for our customers -- all while enhancing our operating margins and furthering our market leadership," Evangelist said.

Subscribers can also choose to have five DVDs out at a time for $29.99 or eight DVDs out at a time for $39.99.

Walmart.com offers three out for $18.86, four out for $21.94 and a two-out budget plan for $15.54; Netflix's three-out plan is $21.99, five out is $33.99, eight out is $49.99 and the site's budget offering is two out and limited to four per month for $14.99.

The site is set up to offer games for sale as well as movies for sale or rent. Current titles carry a “buy now” button, while the site information discloses that it will not sell out-of-print titles.

The Blockbuster site promises delivery within two to three days. Netflix promises next-day delivery in most markets it serves. Wal-Mart does not specify on its site.

Will Blockbuster's move into subscriptions change the industry landscape? Join the discussion here.

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