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According to an article in the Hollywood Reporter, Blockbuster Video is getting very serious about video games. Along with offering new extensive rental programs for certain games, Blockbuster will soon be selling new video game consoles. Here’s the article, with all the details:

NEW YORK (The Hollywood Reporter) --- As it has done so often in recent quarters, Blockbuster Inc. once again blew past Wall Street's earnings estimates Wednesday, reporting stronger-than-expected first-quarter results despite a weak video release slate. Also in keeping with trends of recent quarters, the world's largest video rental store chain saw its financials boosted by the fast-growing DVD format. The latest period, however, also marked a turning point for a category that Blockbuster thinks will fast become another key growth driver: video games.

After years of declining rental revenue, games are on the rebound. "The first quarter saw the first positive year-over-year revenue comparison in game rentals since the fourth quarter of 1999," chief financial officer Larry Zine said in an earnings conference call Wednesday.

CEO John Antioco added that this contributed to the company's upside earnings surprise. "To counter a weak first-quarter environment, we previously told you we would focus on DVD and games, and we did," he said during the call.

Blockbuster, which is 82%-owned by media conglomerate Viacom, posted a profit of $66 million for the quarter, up 42% from a year earlier. Including a $1.82 billion noncash charge to reflect new goodwill accounting standards, Blockbuster recorded a loss of $1.75 billion. First-quarter revenue edged up 1.5% to $1.33 billion.

Blockbuster breaks out game rental revenue only for years that have already ended, but analysts said games revenue could have seen a year-over-year gain of about 10% in the latest quarter.

With the gaming sector reinvigorated by new consoles, including the U.S. launch of Sony Corp (news - web sites).'s PlayStation 2 (news - web sites) in fall 2000 and further boosts from the recent rollouts of Nintendo (news - web sites)'s GameCube and Microsoft's Xbox (news - web sites), "Blockbuster has the opportunity to strengthen its gains from this field, Jefferies & Co. analyst Kavir Dhar said. "The gaming industry runs in cycles of usually about five years, and the latest cycle has just started."

Since it usually takes about a year for a new console to gain momentum as more software titles become available, "there is still a lot of potential ahead," with benefits fully kicking in as the year unfolds, SG Cowen analyst Peter Mirsky predicted.

Given this opportunity, Blockbuster has started to more aggressively promote games in its stores. Special promotions have included a 30-day exclusive rental period for new titles, allowing consumers to rent a game starting the same day it is available in retail stores, and a Games Rental Pass allowing one rental per day for 30 consecutive days for as little as $24.99.

For the past few months, 3,000 of the nearly 8,000 Blockbuster stores have also sold PlayStation 2 hardware in what management sees as a synergistic offering. The GameCube and Xbox are being introduced for sale as well, while more promotions will be launched in the summer, Antioco said Wednesday.

Management also plans to bundle hardware sales with rental offers, while exploring the sale of new games in addition to sale of used games, Antioco said. He added that the company is exploring a mail-order system and a way for consumers to trade games with one another.

"Our mission going forward is to make sure Blockbuster is the place for DVDs and games," Antioco said. "Many customers come to us for movies but still go elsewhere for games. We think we can fix that."

Blockbuster shares rose 10% on Wednesday to 26.95.