Blockbuster hones digital plans

Downloads key to future, CEO says

NEW YORK -- After a disappointing earnings call last week, Blockbuster chairman and CEO Jim Keyes on Thursday pointed to a redefinition of his firm's Total Access and digital download options as signs of hope for the future of his embattled company.

Speaking at Blockbuster's analyst day, Keyes said his team was working on a new Web site for the company that will be integrated with the recently acquired Movielink service. He envisioned a future in which Blockbuster was synonymous with digital downloads.

"There's no clear-cut dominant brand for digital downloads," Keyes said. "We want to take Blockbuster and make it mean digital download. We've got a lot of work to do, but we know it's possible, and we'll be aggressively working on that."

Keyes, though, offered little in the way of specifics as far as what the new would look like and how the digital films would be available. He said his company and Movielink are working to build a new team that would put together the site.

Another part of the strategy of moving customers to the digital realm would come in the form of kiosks, Keyes said. Again, without getting specific, the CEO talked of kiosks in Blockbuster stores and ATM-like installations in airports, train stations and supermarkets where customers could download movies to a disc or flash drive.

Speaking on the scaled-back Total Access promotions, Keyes acknowledged that his company overshot in terms of the amount of customers who desire to receive rental movies in the mail, and the renewed focus on the stores was a reflection of that. But he also took issue with observers that said Blockbuster had conceded the DVD-by-mail battle to rival Netflix.

"I can assure that our desire to compete has not waned," Keyes said. "Frankly, I like our position because we have more channels."

Keyes admitted that while the idea of Total Access was "brilliant," the execution left "a little to be desired." To this end, he said the definition of the service will change to encompass the new digital initiatives.

"All the moving parts will come together at some point," Keys said of Total Access. "They're all designed to grow this business but to do it in a responsible fashion and capture more value from that existing core customer."

Keyes also touched on Blockbuster's advertising deal announced this week with social networking platform Facebook. The company is one of the charter members of the Beacon ad initiative, in which users can recommend rentals on Facebook through the Blockbuster Web site.

Keyes said Blockbuster would promote the project in stores similar to how Starbucks promoted its relationship with iTunes by making gift cards available.

Keyes also said the company was in talks with the studios about different pricing methods, but they will not be unveiling anything "revolutionary." As much as he would like to raise prices now, though, he said that long-term it wouldn't make sense yet.

Last week, Blockbuster reported a net loss of $35 million in the third quarter as the company lost online subscriptions and closed 500 stores in the quarter. Keyes, a former 7-Eleven CEO, said the company was not beyond repair, though, and he was prepared to restore its name.

Said Keyes, "I've seen the ability to take a brand that is tarnished and dust it off and get people to think about it in a very different way."