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Blockbuster Launches New Online DVD Rental Service
With Several Million U.S. Households as Potential Customers, Blockbuster Plans to Capture Substantial Share of Online Rentals
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Blockbuster Inc. (NYSE: BBI) today announced the launch of BLOCKBUSTER Online(TM), a new Internet-based service that allows customers to rent unlimited DVDs by mail, up to three movies at a time, for one low monthly fee of $19.99. With this service, there are no return dates or extended viewing fees, plus subscribers receive two free in-store movie rental coupons each month. The online rental service is the latest in a series of initiatives being implemented by Blockbuster as the company continues to transform itself from a neighborhood movie rental store into an "anywhere-anytime" entertainment destination that eventually will enable customers to rent, buy or trade movies and games, new or used, in-store and online.
With nearly $280 million industry-wide in 2003, the online subscription business represents only a small percentage of the $8.2 billion U.S. movie rental industry. However, the online rental business is growing, and Blockbuster believes it has the potential to appeal to several million U.S. households.
"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 vice president and general manager 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."
In a first step designed to integrate its online offering with the BLOCKBUSTER store network, as well as appeal to the 40 percent of current online renters who continue to rent at a retailing establishment, BLOCKBUSTER Online will offer subscribers two free in-store movie rental coupons each month.
In late May 2004, Blockbuster launched its store-based movie subscription program, the Blockbuster Movie Pass, nationwide. Blockbuster plans to combine its online and store-based subscription programs in 2005.
"The full integration of our online and in-store programs planned for next year will enable us to provide our customers -- old and new alike -- with unmatched convenience, service, selection and value," said Evangelist. "If a customer is in our store and wants to return a movie they rented online, we'll be able to accommodate them. If a member rents primarily in-store, but wants a hard-to-find title we don't typically carry in store, they'll be able to go online and get it. It's a matter of maximizing convenience and choice.
"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."
To reach and attract Internet users to the new online offering, BLOCKBUSTER Online has formed marketing alliances with two of the leading Internet service providers -- MSN and AOL. These alliances will allow BLOCKBUSTER Online to reach approximately 75 percent of the U.S. Internet audience. Initially, MSN and AOL will promote the BLOCKBUSTER Online service through banner ads and promotional links. However, within months, BLOCKBUSTER Online users will be able to conveniently add and manage their movie queue from MSN and AOL. This is the first in a series of moves by BLOCKBUSTER Online to give customers the ability to access their movie queue from multiple locations.
About BLOCKBUSTER Online
Beginning today, consumers can logon to www.blockbuster.com to sign up for a free two-week trial of the three-movie-out plan from BLOCKBUSTER Online. Following are specific details about the new BLOCKBUSTER Online rental service:
-- BLOCKBUSTER Online is currently available for a low monthly fee of
$19.99, giving customers unlimited DVD rentals, up to three out at a
time, plus two free in-store movie rental coupons per month.
-- BLOCKBUSTER Online subscribers create and maintain a personal
"queue" -- a list of movie selections -- on Blockbuster's Web site
(www.blockbuster.com ).
-- BLOCKBUSTER Online will pull the first three available movies in a
subscriber's queue and send them to the subscriber's home. All
shipping is free.
-- When a BLOCKBUSTER Online subscriber is finished with a movie, he or
she returns it in a self-addressed, postage-paid envelope provided by
Blockbuster.
-- Once a movie is returned, Blockbuster will ship the next available
DVD from the subscriber's queue.
-- Subscribers can rent unlimited DVD movies -- with three out at a
time -- and keep them as long as they want, with no extended viewing
fees.
-- For last-minute "gotta have it now" rentals, subscribers can use
their two free movie rental coupons, delivered electronically each
month, at participating BLOCKBUSTER stores nationwide. A separate
in-store membership is required. Blockbuster in-store membership
rules and rental terms will apply.
-- Consumers can also choose an option that allows them to have five
DVDs out at a time for $29.99 or eight DVDs out at a time for just
$39.99.
-- For additional details, visit www.blockbuster.com .
About Blockbuster Inc.
Blockbuster Inc. (NYSE: BBI) is a publicly traded subsidiary of Viacom Inc. (NYSE: VIA)(NYSE: VIA.B) and a leading global provider of in-home movies and game entertainment with nearly 9,000 stores throughout the Americas, Europe, Asia and Australia. The company may be accessed worldwide at www.blockbuster.com . Viacom is a leading global media company with preeminent positions in broadcast and cable television, radio, outdoor advertising and online.
This news release contains forward-looking statements relating to Blockbuster's launch of a new online DVD rental service, including, without limitation, statements relating to the anticipated impact of such service on Blockbuster's market share and other business results and its integration of this online service with its in-store capabilities. These forward-looking statements are based on Blockbuster's current intent, expectations, estimates and projections and are not guarantees of future performance. These statements involve risks, uncertainties, assumptions and other factors that are difficult to predict and that could cause actual results to vary materially from those expressed in or indicated by them. Factors include, among others: (i) consumer demand for Blockbuster's online DVD rental service and the related impact of competitor pricing and product and service offerings; (ii) Blockbuster's ability to respond to changing consumer preferences and to effectively adjust its online service offering if and as necessary; (iii) Blockbuster's ability to successfully integrate its online and in-store service offerings; (iv) Blockbuster's ability to implement and maintain the information technology systems and infrastructure necessary to support its online rental offering and its anticipated integration of its online and in-store service offerings; and (v) other factors as described in Blockbuster's filings with the Securities and Exchange Commission including the detailed factors discussed under the heading "Cautionary Statements" in Blockbuster's annual report on Form 10-K for the fiscal year ended December 31, 2003.
The names of actual companies and products mentioned herein may be the trademarks of their respective owners.
SOURCE: Blockbuster Inc.
CONTACT: Karen Raskopf or Randy Hargrove, both of Blockbuster Inc.,
+1-214-854-3190
Web site: http://www.blockbuster.com/