Rentals Measured By The Pound…

Wednesday, November 16 2011
Rentals Measured By The Pound…

Gerry Butler is a happy man. The Blockbuster supremo has just fired the rental giant’s first shots in a war for the hearts and minds of UK consumers – and crucially renters – that will see Blockbuster, which used to be dubbed the Big Blue by the trade press, taking on competitors such as LOVEFiLM and the soon to be arriving on these shores Netflix.

And he’s happy because all the signs are showing that it’s working.

The company slashed the price of its catalogue rentals to 99 pence, a move that he firmly believes has paid off. “I can’t share the exact figures,” he tells The Raygun, “but there’s been double digit growth of customers in our stores.

“Customers are flocking back to Blockbuster.”

So how did it come about? What was the thinking behind the move? It follows exhaustive research among Blockbuster’s existing and potential customers in the UK, speaking to around 5,000 consumers. And an “overwhelming” number wanted to see better value from rentals.

“Ireland’s been in a horrible place [for the past few years],” he explains. “We’ve seen what it’s done and now it’s coming to the UK.”

So to aid its customers and to offer them greater value, it slashed the price of some 60 per cent of its Blu-ray and DVD inventory (around 2 million units all told) down to the 99 pence mark. Part of the inspiration came from fast food giants such as McDonald’s and Burger King, who have helped themselves become almost recession-proof by making value offerings at a price point just under a pound.

“It’s unbeatable value,” he enthuses, “you can rent two or three movies at a time, it’s the cheapest way to watch them.”

Rental is a strange beast, after a few years in the doldrums, when retail and other elements were king, the form has enjoyed something of a resurgence, partly inspired by rental by post companies such as LOVEFiLM, but Butler believes there are other reasons too. Chief among these, is the fact that rental is cheap and, as was proved in the VHS era during, say, the early 90s slump, fairly recession proof too

“What’s happened over time,” Butler says, talking about the post-VHS rental market, “is that terrestrial TV got better, Sky TV got better, Sky Atlantic [came along] and cinemas got better.

“It evolved. Retail grew, the price of retail [DVD] went up, so the price of rentals went up.”

And that rental price rise took away one of the sector’s chief selling points (or rather, renting points). Rentals for under £1, Butler says, are taking the business “back to our grass roots”.

It is similarly offering a £5 for five nights game rental deal and believes both are offering what consumers want at a price they can afford.

“Retail is a very big part [of our business] but not every consumer wants to buy every film. There are about 35 different titles a month and with the best will in the world no one can afford all of them.

“The UK consumer has a huge appetite to watch films and our customers are renting some and buying others.

The current thrust is very much focused around physical rental, which still has a strong future. “There’s already talk in the press about digital delivery,” he notes. “But it’s vastly overstated and overrated. Physical will be around for a long time.”

Blockbuster is working on streaming options, but it believes that its offering is more than enough for the UK consumer.

And for the moment, the 99 pence offering is where it is taking its business.

The initiative will, Butler confirms, continue into 2012 as Netflix arrives on these shores, and Blockbuster is further signing up more exclusive rental window deals, which act, he says, as a “platform” for release.

Is it, The Raygun offers, a case of Blockbuster staking its claim for the UK rental business ahead of Netflix’s arrival?

“100 per cent,” Butler concludes. “We’re marking our territory.”

Tags: , , ,