Live from eTail: Integration Is Blockbuster Concept

Palm Desert, CA–You’d have to be living on Mars not to know that Netflix has been gobbling market share of the movie rental business. So what do you do if you’re competitor Blockbuster Online? You integrate channels.

In his Feb. 14 session at the eTail conference here, Shane Evangelist, senior vice president/general manager for Blockbuster Online, noted that the company felt that it had a superior product to Netflix, “but we weren’t getting the message out to the right audience.” To better target its customers, Blockbuster did a lot of segmentation and spent a lot of money to find out something it already knew: It has three types of customers–those who prefer renting at the stores, those who prefer stores and online, and those who prefer renting online. To better compete with Netflix, Blockbuster had to eliminate some of the pain points with renting movies online.

Those pain points include being without a movie while waiting for delivery, not having the right movie at the right time, not having an immediate remedy for damaged product, and delivery time. Two-day delivery is fast, “but it’s still two days, and there’s no mail on Sunday,” Evangelist noted.

To address these issues, Blockbuster Online developed alternative consumer offers: an integrated pass that allows for multiple DVD exchanges freely between channels, a combo pass that enables multiple DVD exchanges in the channel received, and a total-access pass with which customers can rent movies online and have the option to exchange them in the stores. The ability for customers to exchange damaged products ordered online in the stores “has been a huge win for us,” Evangelist said.

Blockbuster’s total-access pass “truly integrates the online and store channels, giving customers total control.” To get the message across, Blockbuster’s new ad campaign includes TV commercials “that make the store the hero,” Evangelist said, which is important, because “the customer segment we’re going after loves the store.”

Customers are interested in this sort of integration and expect to use both the online and in-store channels, he said. An audience member asked why Blockbuster didn’t go truly multichannel and allow customers to order movies over the phone. Evangelist paused for a few seconds, then said, “I’ll take that one back with me.”