Blockbuster to launch first national ad campaign in three years

After years of losses and store closures, Blockbuster Inc. has a message for the country: We’re still here.

The once dominant movie-rental chain, which is undergoing Chapter 11 reorganization, will this week launch its first nationwide advertising campaign since 2007. The goal is not only to advertise what the company sees as its advantages over competitors Netflix and Redbox, but also to let consumers know that despite widely publicized struggles, it's still open.

“One of the biggest challenges for Blockbuster for the past few years has been public perception, and this is intended to remind people that we're still in business and we have a unique offering,” Chief Executive Jim Keyes said.

Blockbuster has fallen behind its competitors in recent years as consumers have flocked to Redbox’s kiosks, which rent movies for $1 a day, and Netflix’s DVD-by-mail subscription plan, as well as a growing number of digital options. Blockbuster now offers its own versions of all those options, but the other companies had a head start.

Dallas-based Blockbuster won approval from a federal bankruptcy judge and the lenders funding its operations to spend $15 million to $20 million on the new ad campaign, which highlights the fact that it offers many new releases 28 days earlier than Netflix and Redbox do. Both of those companies have agreed to impose delays on offering new DVDs from 20th Century Fox, Universal Pictures, Warner Bros. and, in Netflix's case, Sony Pictures because of the studios' concerns that their low rental prices undercut profits. Blockbuster charges higher prices, typically $3 to $5 for an in-store or online rental, generating more money for studios that share in the revenue.

With the new campaign, Blockbuster’s ad spending next month is to be three times as high as it was last December. The final month of the year is traditionally one of the most lucrative for the company, as summer event movies come out on DVD and families watch movies together over the holidays.

For the last several years, Blockbuster has focused its limited advertising on certain markets. But, Keyes said, the company felt it was important to run national ads on the broadcast networks in order to send a message to all consumers as well as to promote its digital and mail offerings, which are available throughout the country.

Since Keyes came on board in 2007, the company has tried to turn around its failing business by closing stores and investing in those digital and mail offerings, as well as partnering with NCR Corp. on rental kiosks. But Blockbuster has continued to lose money. It has been hobbled by nearly $1 billion in debt, and by the middle of summer, it could no longer afford interest payments. The company filed for bankruptcy protection in September.

As part of the reorganization, Blockbuster’s debt is being wiped out, and control of the company will be handed over to its bondholders. The company is expected to close 500 to 800 of its 3,425 U.S. stores. It is aiming to exit bankruptcy by early spring.

-- Ben Fritz

Related:

Blockbuster files for Chapter 11 bankruptcy, sets plan to reorganize

Blockbuster tells Hollywood studios it's preparing for mid-September bankruptcy

Photo: A Blockbuster store in Dallas. Credit: Ron Heflin / Associated Press

Comments

[DG3]

I don't know why the studios are subsidizing Blockbuster by giving them a 30-day head start on new releases.

It won't really matter in the end anyway. Blockbuster's days are numbered.

[Scott]

Blockbuster has a unique offering alright. Six Bucks to rent a movie that costs Blockbuster $12.50 to purchase. Some day the movie business will recognize that Blockbuster was one of the worst things to happen to the film industry; a franchise that turned a special experience, renting a movie, into one of the most annoying retail experiences on the planet. A franchise that reduced the entire film rental library to 8,000 titles of movies we've all seen.; a franchise that endorsed colorization (not to be confused with color grading); a franchise that favors, as policy, censorship over freedom of speech; a franchise known for over-expanding, not to meet customer demand, but merely to put independent stores out of business. Yea, Blockbuster is a great company!

[Juan]

A problem with Blockbuster is that (relative to value offered) the prices for older movie rentals are equal (in cost) to going to a theater for "first run" films. There are better alternatives that cost less and offer greater choices.

[Joe]

Sorry to say it but Blockbuster failed. With outrageous late fees, terrible service, and limited selections the company should fail in a capitalist system where dollars vote for the winning business. In my town, Blockbuster demands $5 for a two day rental on a new release and quickly compounding late fees and Netflix charges $9 a month for its service, do the math and see who wins.

[Cecil B. Demuff]

BLOCKBUSTER had a monopoly, basically, for years, and man oh man did they lord it over the customer with their ropes for waiting in line and the late fees for one second late, etc.
Well, they couldn't keep up with technology, since the new technology made their brand of snobbery obsolete.
HAHAHAHA!
I hope they collapse.

[Matt Fellows]

Blockbuster can't survive Netflix streaming and Redbox $1-a-day rentals...NCR owns the rights to their kiosk brand...no one gives a rip about the 28-day wait window...it is pure economics $5 versus $1. The studios waited too long to try and prop up these brick & mortar dinosaurs. The mom & pop stores out here are $1.49 a night...Mike's Movie Madness is about $2-a-night...and they HAVE all these "exclusive titles"...EVERYONE beats BB on price-point alone. An aggressive marketing plan will accomplish NOTHING if they don't intend to make their rentals COMPETITIVELY PRICED!!

[ME TOO]

Oh my a video store charged you for keeping a movie late. Oh what a bad company! What would happen if you paid your rent late or took you rental car back late. Retards, If you keep the product you pay for it!!!LOL

[Matt Fellows]

Unless you have a sordid history of playing a game called "no late fees"...from Wikipedia....

In 2005, Blockbuster launched a marketing campaign describing changes in its late fees policy and offering "No Late Fees" on rentals. The program sparked investigations and charges of misrepresentation in 48 states and the District of Columbia, as state attorneys general including Bill Lockyer of California and Eliot Spitzer of New York argued that customers were being automatically charged the full purchase price of late rentals and a restocking fee for rentals returned after 30 days. In a settlement, Blockbuster agreed to reimburse the states the cost of their investigation, clarify communication to customers on the terms of the program and offer reimbursement to customers charged fees prior to the clarification. New Jersey filed a separate lawsuit and was not a party to the settlement.

The 2005 controversy came after a related lawsuit settled in 2002 in Texas. That lawsuit, alleging exorbitant late fees, led the company to pay $9.25 million in attorney fees and offer $450 million in late fee refund coupons (which were rent-one get-one-free coupons, and thus required the customer to make an initial expenditure). The company estimated that the coupons would ultimately cost about $45 million depending on the redemption rate; an attorney for the plaintiffs estimated the final cost at closer to $100 million at a redemption rate of about 20% (calculated based on a similar case in Michigan)