January 10, 2008 in Business

Blockbuster predicts rental boost

Associated Press The Spokesman-Review

DALLAS – The chief executive of Blockbuster Inc. said Wednesday DVD rentals should get a boost early this year from high gasoline prices and the Hollywood writers’ strike, which will help his stores rent more old TV episodes.

James Keyes said the outlook made him confident that Blockbuster can meet covenants imposed by its lenders “in the first quarter and going forward.”

He said Blockbuster’s DVD rentals will benefit as pricey gasoline keeps people at home and by store closings among rivals.

Keyes also said Blockbuster is weighing whether to jump into the kiosk business, following the lead of redbox and other operators who have set up movie-rental vending machines inside stores.

Kiosks could help Blockbuster expand its reach, and the chain is testing them, Keyes said. But it hasn’t been more aggressive because it believes kiosks may only be an interim step before most movies are rented in digital form, he said.

“We think the ultimate solution is a kiosk in a Blockbuster store and outside of a Blockbuster store that … will be able to distribute that content to your portable device,” he said.

The Dallas-based company’s shares have fallen in three of the past four years as it battled against cheap DVDs sold at Wal-Mart Stores Inc. and other stores, and the online business lost money in an effort to catch Netflix Inc.

Blockbuster lost 500,000 subscribers to its online-order, mail-delivery business in the third quarter.

Last month, Blockbuster raised subscription rates for some of its remaining 3.1 million online subscribers – it won’t say how many. Keyes said Blockbuster can boost its traditional in-store rental business by doing a better job of keeping hot titles in stock.

Thoughts and opinions on this story? Click here to comment >>

Get stories like this in a free daily email