() is one of the largest
Chains of
Video Tape ,
Video Game and
DVD Rental Shop s in the world. It is headquartered at
Renaissance Tower in
Downtown Dallas ,
Texas , and has locations in twenty-nine countries, including the
United States ,
Canada ,
Spain ,
Mexico ,
Ireland ,
Puerto Rico ,
Australia , the
UK ,
New Zealand ,
Brazil and
Taiwan .
Blockbuster opened its first store on
October 19 ,
1985 , and with
Wayne Huizenga at the helm it soon grew into a multi-billion dollar corporation. It was sold to
Viacom in
1994 , at a price of $8.4 billion but later separated from the company in October, 2004. During the
1990s Blockbuster bought out their major UK rival Ritz Video and changed the name of all the stores to their own, which made them the #1 video rental store in the country by a wide margin.
Blockbuster has lost significant amounts of money in recent years: $1.6 billion in 2002, almost $1.0 billion in 2003, and $1.2 billion in 2004.
On
October 13 ,
2004 Viacom spun off Blockbuster as a separate company.
In December 2004, Blockbuster announced it wanted to do a ,
2005 by its smaller competitor, the Dothan, Alabama-based
Movie Gallery . (It is unclear if the proposed takeover by Blockbuster would have received
Anti-trust approval from the
Department Of Justice ).
As of February 2006, the company had a
Market Value of under $500 million.
At the end of
2004 , Blockbuster's annual report put the number of U.S. stores at 5,803 (4,708 company-operated and 1,095 franchised). International stores (operating under Blockbuster and other brands) totalled 3,291, including 426 in Canada, 897 in Britain, and 408 in Australia. It has been claimed that there are more than 43 million U.S. households with Blockbuster memberships.
The company has a large
Irish subsidiary,
Xtravision , which does not operate under the Blockbuster
Brand Name . Blockbuster also owns
Rhino Video Games .
Blockbuster opened 24 outlets in Hong Kong, but announced in January 2004 that it would shut down all of its outlets over an 18 month period
{Link without Title} . A major factor in closing the outlets was competition from much less expensive bootleg (illegal, pirated) copies of movies on tape and DVDs.
The standard business model for video rental stores was that they would pay a large flat fee per video, approximately US$65, and have unlimited rentals for the lifetime of the cassette itself. It was
Sumner Redstone , whose Viacom conglomerate then owned Blockbuster, who personally pioneered a new revenue-sharing arrangement for video, in the mid-1990s. Blockbuster obtained videos for little or no cost, and keeps 60 percent rental fee, paying the other 40 percent to the studio, and reporting rental information through
Rentrak . What Blockbuster got out of the deal, besides a lower initial price, was that movies were not available for sale during an initial release period, at least at an affordable price point - customers either had to rent, wait, or buy the film on tape at the much higher
MSRP price targeted at other rental chains and film enthusiasts, at that time then between $70-$100 before the end of the initial release period.
In 1998, Blockbuster refused to use the same model for DVDs, which was just starting as an alternative format. The studios then decided to price DVDs low enough so that it could be sold to the public in direct competition with video rentals, and to provide no rental-only release period. As a result, the amount of DVD sales increased while rentals of the same titles did not. By 2003, the studios were taking in three times as much money from DVDs sales as they were from VHS videos.
Blockbuster stocks a larger-than-average number of copies for certain new release films, allowing them to promise that the title will be "Guaranteed in Stock." If all copies of that particular title are rented, the customer receives a rain check to rent it for free on his/her next visit. The goals of the "Guaranteed in Stock" promotion are: 1. to appease customers when a particular title is unavailable, 2. to assure customers that Blockbuster carries a large number of copies, and 3. to retain business by encouraging the customer to rent another, different movie during his/her same visit.
Blockbuster Rewards is an optional, upgraded membership program that was started in 1998 to offer members additional benefits. For a yearly fee (usually $10), members can get free rentals with their Rewards Card. A customer may obtain free rentals by the following means:
1. Monday thru Wednesday, for every PAID rental, the customer may rent a non-new release ("Blockbuster Favorites") movie free. i.e. A member who rents two movies and one game may also rent three non-new release movies. There is no limit to the number of free movies a customer may accumulate using the rent 1, get 1 method.
2. Once a month, the customer receives a coupon in via email or printed on his/her receipt for a non-new release movie.
3. When the customer rents five items within one calendar month, the customer receives one rental free. The rent 5, get 1 rental may be any item in the store - including new releases and games. Only two free rentals can be accumulated each calendar month using the rent 5, get 1 method.
Customers who rent more than 200 movies each year may receive a Blockbuster Gold Rewards Card, which is obtained by invitation only. The Gold Rewards Card extends the rent 1, get 1 free rental window from Sunday through Thursday; lets customers earn more than 2 rentals using the rent 5, get 1 method; and waives the $10 yearly fee.
The Rewards program is designed to provide a discount to high-volume customers, especially those who watch more than just the latest releases. Because the cost is relatively low (about the cost of 3 rentals) and its effective time is so long (1 year), it also caters to those with sporadic rental patterns. Moreover, unlike the Movie Pass program or an online program, no credit card is required to purchase Rewards, so it can serve as a volume discount to those without credit cards.
Blockbuster also started a Movie Pass program, which operates similarly to NetFlix or its own mail-in rental service. Blockbuster members pay a flat fee to rent as many movies as the member would like. There are currently two different plans: 1 Movie and 2 Movies at a time. The customer rents 1-2 movies at no additional cost, watches the movies, and then returns them to the store in order to swap them for 1-2 more movies. The in-store Movie Pass has the advantages of both speed and volume. A customer may swap movies twice a day or more, if he/she so desires. Moreoer, the Movie Pass allows a customer to obtain a movie on-demand, rather than waiting the 1-2 days for an online rental. On the other hand, the selection is limited compared to mail-in programs, and the in-store Movie Pass is typically more expensive. When Late Fees existed, the Movie Pass program enabled a customer to keep their movies for whatever period they wished without having to deal with Late Fees.
Blockbuster also offers a Game Pass, which is exactly the same as a movie pass, except that it allows customers to swap games instead of movies.
Blockbuster (like most other rental stores) tends to stock more new movies than older releases, in order to capitalize on heavy consumer demand for new release titles. Titles that are more than one year past their initial DVD release date are stored as "Non-New Release" titles. Typically only 1-4 rental copies are retained past the first year of release. The large volume of new release copies are typically sold after the initial renting rush. These copies are usually sold "used" for around $10-12, sometimes as low as $5. Most Blockbuster locations also accept trade-ins of used DVDs, which are sold alongside the existing stock of previously rented movies in order to create a more robust selection of titles for sale.
Obviously, not every video rental location can hold every title ever made. Increasingly, Blockbuster, movie companies, and other rental stores are adopting online or other methodologies
{Link without Title} to deliver movie content to their customers. Those customers who are interested in a large catalog of older movies are best suited to online rental programs, such as Blockbuster Online (see ''infra'') or
Netflix , both of who offer a larger variety than any brick-and-mortar video store can provide.
rental case from Blockbuster Video. The newest version replaces the paper insert with the film's actual DVD lithograph. A barcode sticker is placed on the front (and back) and a '2-Day Rental' sticker is on the front; no '2-Day' sticker is present if the title is a seven-day rental.]]
On January 1, 2005 Blockbuster introduced
their "End of Late Fees" program.[http://www.blockbuster.com/homepages/displayPage.action?channel1=NoLateFees&nav=false Instead of
Late Fee s, there exists a seven day window after the due date, when the item may be returned without charge. After this point, Blockbuster automatically charges the renter for the selling price of the unreturned item, minus the rental fee. Customers may return the item within 30 days after the automatic sale date to have this charge refunded, less a "restocking fee" of $1.25. The initial due date of the rental item and the automatic sale date are both printed on the receipt beneath the title of the rental item.
- The "No Late Fees" policy, as stated above, applies to corporate-owned stores, and some elements of the policy may differ among Franchised stores). Exact terms and conditions {Link without Title} can be found Blockbuster's website.
On February 18, 2005 the (not including New Jersey), in which it agreed to more clearly inform customers of the terms and limitations of the program. A refund program was set up for those affected by the purchase charges or restocking fees, and rental coupons offered to compensate for late fees paid in non-participating stores prior to the agreement. Blockbuster also paid $630,000 to the states involved to cover the costs of the investigation.
This is not the first time Blockbuster had been sued over late fees. In 2002, Blockbuster settled a suit that claimed that their late fee policy was unfair. Under the old Blockbuster policy, a customer was charged the rental price for every day a movie was late. For example, if it cost $5 to rent a 5-day rental and it was returned 5 days late, you were to be charged $25. Part of the settlement included giving out coupons to customers that paid late fees. Blockbuster also changed their policy by charging late fees (dubbed "extended-viewing fees" for legal purposes) for the rental period and not per day.
{Link without Title}
In August 2004
Blockbuster introduced an Online DVD Rental service in the U.S. to compete with the established market leader,
Netflix . The initial price of the standard three-disc plan was $19.95, which was below the Netflix price (which had increased from $19.95 to $21.99 in June) [http://www.washingtonpost.com/wp-dyn/articles/A18916-2004Apr16.html .
In October, Netflix reduced its own 3-disc price to $17.99; Blockbuster responded by reducing its price to $17.49
Blockbuster made a further reduction to $14.99 in December, and apparently guaranteed this price to existing customers until January 2006 [http://www.b2i.us/profiles/investor/ResLibrary.asp?BzID=553&ResLibraryID=7767&GoTopage=3&Category=27 . In August 2005, Blockbuster raised their prices for new customers to match the Netflix level of $17.99 [http://www.b2i.us/profiles/investor/ResLibrary.asp?BzID=553&ResLibraryID=11076&GoTopage=1&Category=27].
The above prices are for the standard three-disc plan; other plans vary from $9.99 for one disc to $47.99 for the 8-disc plan.
Blockbuster currently offers in-store bonus coupons to all of its online customers. Customers with two-disc or higher plans are given four coupons per month to rent a free DVD from a brick-and-mortar location, while one-disc customers are given two in-store rental coupons each month. Blockbuster also offers a special promotional discount to customers who purchase the online subscription in-store. The first month of online service is $9.99 for a three-disc plan. After the initial month, customers have the option to retain, cancel, or modify their subscription packages.
Blockbuster's U.S. online operation started with around 10 warehouses; further expansions
have brought that number to 30 [http://blockbuster.custhelp.com/cgi-bin/blockbuster.cfg/php/enduser/std_adp.php?p_faqid=305&p_created=1095272563&p_sid=q_z-VhMh&p_lva=&p_sp=cF9zcmNoPTEmcF9zb3J0X2J5PSZwX2dyaWRzb3J0PSZwX3Jvd19jbnQ9MSZwX3Byb2RzPSZwX2NhdHM9MCZwX3B2PSZwX2N2PSZwX3NlYXJjaF90eXBlPWFuc3dlcnMuc2VhcmNoX25sJnBfcGFnZT0xJnBfc2VhcmNoX3RleHQ9d2FyZWhvdXNl&p_li=&p_topview=1 . The company had 1 million customers by August 2005, and has stated a target of 2 million by the end of the first quarter of 2006 [http://www.b2i.us/profiles/investor/ResLibrary.asp?BzID=553&ResLibraryID=11076&GoTopage=1&Category=27].
In the
UK , Blockbuster has been providing a version of online rentals since October 2002
with its "Pay Per Rent" [http://www.blockbuster.co.uk/bandsignup/whatspayperrent.aspx service. This is more like a postal version of store rentals than the traditional online DVD rental subscription model, with per-rental prices of £3.50-£4.50, with a rental period of 5 nights (usually Monday-to-Friday, not including postal delivery times), and late fees (£0.70-0.90 per disc) [http://www.blockbuster.co.uk/Help/PayPerRentQuickStart.aspx].
In May 2004, Blockbuster also introduced
a conventional online subscription service [http://www.blockbuster.co.uk/Help/FAQPage.aspx?faqname=unlimiteddvdrental . The unlimited 3-disc plan is £14.99/month.
Blockbuster's massive international permeation and domination of the video market has placed certain business practices under scrutiny.
On
November 27 ,
1990 , the
MPAA introduced the
NC-17 rating in order to distinguish non-pornographic adult material from '
X-rated ' materials. Under pressure from the Christian organisation the
American Family Association , headed by Rev.
Donald Wildmon , Blockbuster decided not to stock NC-17 titles, and certain "unrated" titles. The AFA also successfully campaigned against them carrying films such as ''
The Last Temptation Of Christ ''.
Recently Blockbuster followed many other retail stores and pulled from store shelves after the game's rating was increased from Mature to Adults Only. Later, Blockbuster began carrying a modified version of the game, from which pornographic elements had been removed.
Critics of the chain, including
Naomi Klein in her
Anti-globalization book
No Logo , say that Blockbuster is involved in
Censorship - this accusation stemming allegations that Blockbuster edits videos for release beyond the standard retail cut, or at the very least uses its significant market share to influence studios to do more editing in order to lower offer movies that have more "family-friendly" ratings and can potentially reach a wider market.
One of Blockbuster's most well known
Advertising Campaign s was launched during the 2002
Superbowl . It starred the voices of
Jim Belushi and
James Woods , as a
Rabbit and a
Guinea Pig in a pet shop, located across the road from a Blockbuster store.
- "Wow! What a difference!" (Australia, Canada, U.K. and U.S.)
- "Make it a Blockbuster Night." (All Countires)
- "Let the good times roll!"
- "Go home happy." (Australia, 2004)
- "One word...one world" (related to combining Blockbuster Video & Music)
- "Bringing entertainment home." (U.K. and Canada)
- "The end of late fees. The start of more."
- "Feel The Rush" (Note: Only applies to special "Game Rush" stores)
- "Renting is BETTER Than Ever."
- "Feel the FREE." (used in Canada for the Blockbuster REWARDS)
- "MORE from BLOCKBUSTER." (used in Canada and Australia)
- "Don't rely on anyone else to entertain you!" (UK, 2005)
- "More movies, more choice, more value." (UK, 2005)
