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DJ Blockbuster Launches Online DVD Rental Service >BBI VIA
DALLAS (Dow Jones)--Blockbuster Inc. (BBI), moving to expand from its slowing in-store movie-rentals business in the wake of competition from Internet-based rivals, launched an online service allowing customers to rent up to three DVDs at a time that will be sent through mail.

Like online DVD-rental pioneer Netflix Inc. (NFLX), the Blockbuster service will have no return dates or extended viewing fees for DVDs. Blockbuster said in a press release Wednesday that subscribers will also receive two free in-store movie-rental coupons each month.

The Blockbuster Online service will charge a monthly fee of $19.99, which below the $21.99 fee currently charged by Netflix.

"We think now is the opportune time for Blockbuster to enter the online rental business, and we plan to quickly establish ourselves in this arena by aggressively marketing, pricing and combining our online program and in-store capabilities," said Shane Evangelist, Blockbuster vice president and general manager of Blockbuster Online, in a statement.

The company said it has marketing deals with Microsoft Corp.'s (MSFT) MSN and Time Warner Inc.'s (TWX) America Online divisions. Initially, MSN and AOL will promote the Blockbuster online service through banner adds and promotional links. Within months, Blockbuster Online users will be able to add and manage their movie queues from MSN and AOL, Blockbuster said.

In May, Blockbuster began a store-based movie subscription program that allows users to take home as many as three DVDs or videos and keep them as long as the want, for monthly fees ranging from $24.99 to $29.99 a month. The company said Wednesday it plans to combine the online and store-based subscription programs in 2005.

Blockbuster's foray into online movie rentals comes as the company faces slowing demand for its traditional store-rental service. In late July, Blockbuster reported a 24% decline in second-quarter earnings and attributed the drop to a "challenging" rental environment, which the company expects to continue through at least the first half of 2005.

Blockbuster is a publicly traded unit of Viacom Inc. (VIA), though the companies are in the process of separating.

Company Web site: http://www.blockbuster.com