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Blockbuster Rental Revenue Drops in Q1

12 May, 2004 By: Holly J. Wagner

Same-store rentals at Blockbuster video stores in the United States were off 10 percent in the first quarter of 2004, and movie rental revenue was down 10.7 percent, according to a corporate filing with the Securities and Exchange Commission.

Although the company had said same-store rentals were off 8.2 percent and same-store revenues down 7 percent worldwide, the domestic/foreign split was disclosed among details of Big Blue's first quarter that were not mentioned in its earlier quarterly press release and call.

Other revelations in the filing: VHS accounts for just 20.6 percent of the company's domestic rental revenue, and game rentals account for 10.9 percent; PVT sales generated 0.4 percent more in rental revenue than in the first quarter of 2003; domestic game rental revenue was off 5.5 percent, partly as a result of a shift to selling budget games and game trading; the chain is already offering its movie subscription plans in 1,300 stores in 15 U.S. markets; it has 179 game store-in-stores in the United States and plans to expand the concept. Advertising expenses in the quarter increased 60.3 percent, or $18.8 million, for production and advertising costs for Monster, for which the chain has home video and television distribution rights; and for the chain's new initiatives, which the filing states are aimed at “replacing declining rental revenues.”

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