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Blockbuster Tests Rent-Before-Buy Program

29 Mar, 2002 By: Joan Villa

Blockbuster is competing on the DVD front by testing a rent-before-you-buy program in a handful of U.S. markets.

Television ads for Training Day running in Los Angeles offer the previously viewed DVD to consumers for $9.99 after April 2 if they bring in their rental receipt on the film, which arrived on video March 19.

The ad features the tag line, “Rent It, Like It, Buy It,” reflecting the new strategy.

Blockbuster spokeswoman Elizabeth Greene confirmed that the test ads are running for two weeks in a handful of cities, replacing Blockbuster's past concept of “try before you buy” that essentially sent customers to other outlets for the sale. This way, Blockbuster can gauge customer interest in following up a rental with a $9.99 purchase, she said. Without the rental receipt, the previously viewed copy will sell for $12.99.

“We're testing the concept,” she added. “If it's a product they would consider buying, it's an incredible opportunity and a great deal.”

In the past, Blockbuster has run print ads in some cities promoting previously viewed copies of titles such as The Fast and the Furious and American Pie 2 for $9.99.

“They've been experimenting with $9.99 because three weeks after the film's out, some people haven't made it to Wal-Mart or Costco, where they could buy the title,” observed analyst Jeffrey Logsdon, who follows Blockbuster for Gerard Klauer Mattison & Co.

Logsdon believes the move also allows the retail giant to create demand for its DVD inventory, and at the same time, offer a price point that competes with mass merchant discounting of $15.99 to $16.99 for high-profile titles.

“If Blockbuster can generate three, four or five rentals before someone plucks that copy off the shelf to buy, they've made a great return,” he said.

The strategy is critical now that Blockbuster is moving toward guaranteed rentals and copy-depth approaching 60 units per DVD release. “By putting up that amount of capital and knowing the useful half-life of DVD in the rental marketplace might be 30 or 60 days, you want to find a way to incentivize those who have rented to now pay your going rate to reduce your inventory,” he said. “If you're going to carry 40, 50, 60 copies, 90 days later you might be renting five or 10 a night.”

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