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Six Questions: Blockbuster LLC President Michael Kelly

27 Jun, 2011 By: Erik Gruenwedel

Michael Kelly

Since acquiring bankrupt Blockbuster for $320 million, satellite TV operator Dish Network Corp. has aggressively sought to re-establish the Blockbuster brand. From including 90 days of free in-store memberships to new satellite customers to matching kiosk pricing on myriad titles, the rental icon is leaving no stone unturned in trying to revive its business.

Home Media Magazine asked new Blockbuster president Michael Kelly to share his thoughts on the challenges physical media faces in an age of digital hype — just another day at the office for Kelly, who Dish chairman Charlie Ergen credited as the “visionary” behind the satellite TV operator’s surprise winning bid for the rental chain’s assets.

HM: Do you feel physical media still has the legs to compete with the digital hype?

Kelly: We believe there’s still demand for physical media — especially with the Blu-ray platform, which provides advantages digital services can’t always match — such as special features found on DVDs and the ability to watch DVDs in your car. Plus, there’s a large installed base with DVD players. And, most importantly, stores are convenient and family friendly. Our Blockbuster stores have become a central place for social gatherings for friends and families. Kiosks can’t offer the same experience.

HM: How do you reinforce Blu-ray Disc’s superiority to digital?

Kelly: First, unlike some of our competition, we don’t charge extra for Blu-ray rentals. We think this is a good way to drive adoption of Blu-rays and to keep up with demand from consumers seeking the ultimate high-definition movie experience. In our stores, we are putting Blu-rays right on the new-release wall, making it easier to find the latest Hollywood hits in the best format.

HM: How do you capitalize on the Blockbuster brand’s strength while avoiding its store-based challenges?

Kelly: Stores provide convenience, a greater selection of movies and offer family entertainment. They also provide a great opportunity for consumers to browse for movies they like. In a world filled with a variety of entertainment options, the Blockbuster brand helps sort through the noise. We can offer digital downloads as well as thousands of movie choices within the stores. And our stores help maintain and encourage adoption of new technologies. We also have an advantage of offering movies 28 days before Redbox and Netflix on many movies. All of this helps capitalize on the Blockbuster brand.

HM: How do you get the word out about the fact that Blockbuster’s new releases are cheaper with greater title selection compared with transactional VOD on cable or satellite TV?

Kelly: First, we remind our customers of why they came to Blockbuster in the first place: greater choice, convenience and value. Second, it is clear our new ownership by Dish Network already is producing results and helping to remind the public that we’re continuing to build on Blockbuster’s iconic legacy. We’re running a promotion now with Dish Network giving every new customer three free months of Blockbuster by Mail, and we’ve rolled back prices in the stores. We’ve also begun aggressively advertising to remind consumers to come back to their local video store. So far, we’re seeing success. After all, a neighborhood Blockbuster store attracts friends and family seeking the best in entertainment.

HM: Will Blockbuster ramp up efforts at offering previously viewed movies for sale?

Kelly: At our core, we are a rental and retail business. Historically, previously viewed movies have been a small part of our business. We don’t have any immediate plans to expand our existing efforts.

HM: How can Blockbuster reinvigorate physical disc sales when it is known as a rental business?

Kelly: In these economic times, there have been shifts in consumer behavior, increasingly toward rentals. But there are still groups of people who want to purchase movies. You’ll see us continue to drive retail sales, both in the stores and digitally.

About the Author: Erik Gruenwedel

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