It'll be a lot easier to decide which games to buy thanks to the rental chain's new gaming stance.
Blockbuster to Make Game Transition
By DAVID KOENIG, AP Business Writer
DALLAS (AP) - Blockbuster Inc., which already dominates the movie-rental business, is setting its sights on the highly competitive video game market.
Blockbuster is expected to announce Monday that it will increase its offering of games for sale or rent, gaming hardware and accessories such as controllers and cables.
By Memorial Day, it will reconfigure the game sections of 4,300 company-owned stores, taking out old wooden shelves and installing metal shelves that hold more games. Officials declined to say how much they will spend on additional inventory.
New games often sell for $50 or more. Blockbuster thinks it can rattle the competition this summer by offering a rent-before-you-buy discount and a $19.99 fee that would cover unlimited rentals — but only two at a time — for a month.
"We have a big business around video games, but we've identified that we're not serving it ... as well as we could," says Nick Shepherd, the chain's chief concept officer. He said games account for about 12 percent of Blockbuster's revenue, and the company hopes to double that by the end of next year.
Last month, chairman and chief executive John Antioco told analysts Blockbuster wants to become the top destination for DVDs and games, but he acknowledged that many movie-renting regulars don't think about renting games at the stores.
"We think we can fix that," he said.
Blockbuster's repair job could be helped by the buzz in gaming circles. With new console systems from Sony Corp., Nintendo Co. and Microsoft Corp., U.S. sales of video games rose 10 percent last year to $4.6 billion, according to research firm NPD FunWorld.
"Everyone who bought a PlayStation 1 five or six years ago is now buying a PS2 or an XBox (from Microsoft) or a (Nintendo) GameCube," said SoundView Technology Group analyst Shawn Milne. "You're going to see very good software sales for the next few years. Blockbuster getting in is the right move."
Many small neighborhood shops sell games, but the trade is dominated by several huge chains including Wal-Mart Stores Inc., Toys R Us, Best Buy Co. and Target Corp., and specialty retailers such as GameStop and Electronics Boutique.
P.J. McNealy, research director for Gartner G2, said Blockbuster has built-in advantages to increase its sales of games.
He noted that entertainment was Blockbuster's bread and butter and added, "They have the target demographics already in their store."
Americans in their teens and 20s are the most loyal gamers. Most of the top-selling games — "Metal Gear Solid 2," "Tony Hawk Pro Skater 3," and "Grand Theft Auto 3" — appeal to males. Game makers have been slower to develop content for girls, although "Harry Potter and the Sorcerer's Stone" was a hit with both genders.
Many more games are duds, however, and retailers worry that after paying $50 a pop, unhappy consumers have long memories.
"Buyer's remorse is very common in video games and movies," Blockbuster's Shepherd said. "If they find they don't like the game, or they get bored, they stop buying games."
