At Blockbuster: Rent online, return to store
Blockbuster Inc. yesterday offered online DVD rental customers a service that rival Netflix Inc. can't give them -- the ability to return movies at the chain's stores and receive a free in-store rental each time they do.
"It clearly gives us a better mousetrap," said Blockbuster chief executive John Antioco . "We give you everything our competitor does but a heckuva lot more."
The new service, called Total Access, is an attempt to join Blockbuster's retail and online operations in a marriage the Dallas-based company hopes will benefit both. Store sales have been declining at Blockbuster as consumers have defected to other movie-delivery systems, including cable television, Netflix, and downloadable movies.
Blockbuster, which reports third-quarter financial results today, says it had 1.5 million online subscribers at the end of September and expects to reach 2 million by year-end. Last year, the company had said it would reach 2 million subscribers by March. Online subscribers order their movies over the Internet and typically receive and return them by mail.
Netflix, which pioneered online DVD delivery and has quickly grown its subscriber base to 5.7 million, could not be reached for comment yesterday.
The Los Gatos, Calif., company reported net income of $12.8 million in the third quarter, up 84 percent compared to the same quarter a year ago. Revenue in the second quarter was $256 million, up 48 percent.
Antioco said Blockbuster tested Total Access in several markets and discovered that customers liked the convenience, and stores benefited from increased traffic and ancillary sales.
"It puts the online customer in the store. It creates traffic and incremental revenues," he said.
Demy Martin , who owns 10 Blockbuster stores in Massachusetts and New Hampshire, said the online business has clearly hurt store sales and the new Total Access service has the potential to convert more store customers into online customers.
But Martin said the online business isn't going away and Blockbuster needed to do something to gain a competitive advantage over Netflix.
"The 6 million Netflix customers now have a huge reason to switch back to Blockbuster," he said.
Martin said Blockbuster reimburses him 75 percent of his standard $4.99 rental fee for each movie rental given to online customers returning their movies at his stores.
Blockbuster offers several online rental plans, but its most popular is a $17.99-a-month service that allows the subscriber to have three movies out at once. Those subscribers will be switched to Total Access at no cost. They can return movies through the mail or drop them off at a store and receive a free in-store movie rental. Netflix also charges $17.99 a month for three movies at a time .
Blockbuster officials said the in-store return will also speed up by about a day the delivery of movies from an online customer's movie queue. Movies returned at a store are automatically logged in as returned, eliminating mailing time. The next movie in the online customer's queue is then automatically mailed out.
Bruce Mohl can be reached at mohl@globe.com. 
