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Blockbuster Bows 99-Cent Rentals

27 May, 2011 By: Erik Gruenwedel

New store promotion includes “unlimited” free rentals accompanying new release titles

Blockbuster LLC, which is owned by Dish Network Corp., May 27 said it is cutting the single-day rental price on most movie titles to 99 cents – the same fee charged by kiosks.

Beginning today at 1,700 Blockbuster locations, consumers can rent select new releases for $2.99 ($1.99 for other new releases) on street date for the first night and 99 cents per day thereafter.

Blockbuster typically charged $3.99 to $4.99 for new releases (on street date) for five-day rental periods. The new pricing is designed to encourage single-day rentals, which of course improves in-store title availability.

The move is noteworthy since consumers have access to new release titles four weeks before kiosks and Netflix while paying the identical 99-cent-per-night fee after the initial $2.99 (or $1.99) first-night fee. It also suggests Dish is intent on maintaining operations of Blockbuster stores.

Through July 4, Blockbuster is running a promotion whereby consumers renting $2.99 new releases can also rent any $1.99 title or less for free. When finished watching the free movie rental, customers can return to the Blockbuster store an unlimited number of times to get another one-day rental of any title priced at $1.99 or less – also for free (one free rental out at a time).

“Our customers are seeking a better value – we’ve answered with new pricing and the flexibility of single day rentals,” said Michael Kelly, president of Blockbuster. “Our new pricing gives our customers the best of both worlds: access to the latest releases – many 28 days before Netflix and Redbox – and the most movies at low prices.”

Eric Wold, research director with Merriman Capital in San Francisco, said the unlimited free rentals on secondary titles could have a "minimal" impact on Redbox (and other kiosks). Wold added that the month of June is traditionally a slow month for major new release titles (as studios focus on theatrical).

"Given that Redbox only focuses on new releases and not older, library titles, we do not view Blockbuster's library title pricing strategy as having any impact on Redbox visitation trends in the long run," Wold wrote in a note.

About the Author: Erik Gruenwedel

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