Blockbuster Express Price Hike Hits Home for DVD Renters
Recession-weary Americans trying to save on home entertainment just took another punch in their DVD slots. Blockbuster Express (NCR) became the third major distributor to increase its prices recently, joining Redbox (CSTR) and Netflix (NFLX). Blockbuster Express is doubling the cost of its semi-new releases to $2 as of Election Tuesday, Bloomberg reported. (Good thing Blockbuster Express isn't running for office.) The increase covers all films released to the company's 10,000 nationwide kiosks within 29 to 90 days.
NCR Executive Vice President John Bruno told shareholders last week that the company was exploring "profit-enhancing initiatives," Deadline.com reported.
Justin Hotard, the entertainment general manager of NCR Corp., Blockbuster Express's parent company, said in the Bloomberg story that content-providing movie studios will get a bigger cut from the increase. Studios have been whining for years about sinking DVD sales, to the point that Universal announced it would allow families in certain markets to watch the newly released comedy thriller Tower Heist on-demand at home for $60 three weeks after its theatrical debut. An outcry from cineplex operators stopped the experiment.
The new Blockbuster Express fee compensates for higher operating costs and puts the price of the content more in line with its value, Hotard said. It probably didn't hurt that Redbox and Netflix paved the way, the former increasing its price from $1 to $1.20 and the latter causing shockwaves in the industry by ratcheting up monthly charges 60% to $16 for customers who combine streaming and mail-order.
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The majority of Blockbuster Express movies still will cost $1. Releases that have been available four weeks or less will cost $3, with a $1 a day late penalty. Blu-ray costs an extra buck in all categories. The additional fees will allow Blockbuster Express to avoid the 28-day embargo imposed on new movies from Warner Brothers (TWX), Universal, and Fox (NWS), Deadline.com said.
NCR is looking to unload its Blockbuster Express DVD business while fighting in court against Dish Network (DISH), the owner of regular Blockbuster, to keep the Blockbuster name. Seems a little complicated, but it's likely that all the public will notice are the higher prices.
The increases of DVD rental fees could accelerate home viewers' shift to streaming. That would leave digital providers such as Amazon (AMZN) Instant Video ($79 a year, including free shipping on Amazon purchases) and HuluPlus ($7.99) an opening to swipe a bigger share of the market. Dish-owned Blockbuster has a streaming arm, charging $3.99 for every new release. Blockbuster does have one advantage: It's featuring the Starz, Sony (SNE) and Disney (DIS) content that Netflix will lose in February, thanks to its recent contract dispute with Starz.
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