Blockbuster to Take Video Sales and Rentals Online

The world's number-one video rental business will join the Internet gold rush early next year. Blockbuster Video announced October 20 that it will relaunch its website in November with sales of new and used VHS tapes and DVDs. Video rentals will be available online sometime in the second quarter of next year, company executives said.

Blockbuster is also exploring video-on-demand technologies, and is even looking at investing in a few putative competitors in its search for new ways to deliver its products. Partnerships with several Internet startups are in the works, according to a report by Martin Peers in the October 21 Wall Street Journal.

Embracing the Internet shouldn't be seen as a move away from brick-and-mortar retailing, said Blockbuster's CEO, John Antioco, but rather as a move toward the inevitable future. "As we continue to grow our core business and our market share in the physical distribution of movies, at the same time we are moving on parallel paths to occupy a significant market share in the electronic delivery of movies," Antioco explained.

It isn't clear that jumping into video-on-demand would be beneficial for Blockbuster, a separate, publicly traded unit of Viacom Inc. Despite its huge market presence, Blockbuster's stock has languished due to investors' concern about the coming dominance of electronically delivered entertainment. The stock opened at $15/share, briefly rose to almost $17, and has since traded below its opening price. Blockbuster could spin off its Internet business as a separate company, Antioco said, although not at any time in the near future.

Viacom executives have made occasional noises about possibly unloading Blockbuster due to its operating losses, which amounted to $19.1 million for the most recent quarter. As of October 21, the official word is that any plans to spin off the video chain will be put on hold during the Viacom-CBS merger.

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