Blockbuster Delves into Video Game Retail

May 13, 2002

At a time when video game hardware and software retailers are posting record revenues and impressive growth rates, Blockbuster Inc. announces that it will revamp more than 4,300 of its outlets in the next month to include an area dedicated to sales of video games and game equipment.

Video game specialty chains are building on the industry’s sales of more than $9 billion last year. Viacom-controlled Blockbuster is betting that it can take a bigger share of that booming market by allowing consumers a chance to buy game consoles, and rent or buy the games they play, all in a single location, reports Reuters.

Nick Shepherd, Blockbuster’s executive vice president for merchandising, says the new video game mini-stores will be in 90 percent of the more than 4,300 stores by Memorial Day, with the rest rolled out by mid-June. Microsoft Corp.’s Xbox, Sony Corp.’s PlayStation 2, and Nintendo Co. Ltd.’s GameCube and Game Boy Advance will each get their own dedicated section of shelving. Blockbuster expects to offer 400 to 600 total rental titles and 150 to 200 retail titles, both new and used.

The chain will launch “Rent It! Like It! Buy It!” giving a $5 discount toward the purchase of a game that has been rented at the regular price first. It will also start a “Games Freedom Pass,” allowing customers to rent an unlimited number of games, two out at a time only, for 30 days for $19.95. The one-month pass will be free for people who have bought a console from the store.

Moderator Comment: Is Blockbuster’s making the right
move with its expanded video game strategy or is the retailer straying from
it core competencies?

In this same article, Nick Shepherd, executive vice president
for merchandising, Blockbuster claims that 70% of consumers rent a video game
before making a purchase. Makes sense to us. Sample induces trial. Trial results
in purchase.

The same would also appear to hold true for the retail
DVD business. Prices on DVD titles are now down below $10 on some older movies
and even new releases such as Ocean’s Eleven are being retailed for under $15
in some stores. At these prices, consumers can now rent a title to see if they
like a film. If they love it, they can go back and buy it. [George
Anderson – Moderator

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