Blockbuster offering free by-mail video games

Perk for DVD-by-mail subscribers a 'response' to Netflix

Hoping to reverse what so far has been a losing battle with Netflix, Blockbuster is set to announce Tuesday that subscribers to its DVD-by-mail service can get video games for no additional charge.

Blockbuster has been testing the addition to its service in Cleveland and Seattle for about six months, where 20% of subscribers partake in the offering, said Rod Murray, vp games and merchandise.

Having deemed the offering a success, the company quietly rolled it out nationwide Friday, and a big marketing push begins Tuesday.

The service lets users list video games alongside the DVDs they would like mailed to them.

Murray said Blockbuster purchases games from publishers, and there are no revenue-sharing agreements. Games for the primary console platforms are available, as are handheld games for Nintendo DS and Sony's PlayStation Player.

Blockbuster has been renting video games the old-fashioned way -- via its stores -- for 20 years, but until now it has deemed it too expensive a proposition to introduce games to its by-mail service.

"Obviously, buying game inventory is not a cheap undertaking," Murray said.

Netflix reiterated Monday that it has no plans to follow suit. "Games haven't and don't fit in our model," a spokesman said.

"This is a competitive response from us," Murray said when asked about Netflix, which has thrived in the Internet economy as Blockbuster has struggled mightily. "There's no doubt games are a differentiating factor."

Shares of Blockbuster fell 6% on Monday to 16 cents, and Netflix shares dropped 1% to $116.90. As of Monday, Wall Street valued Blockbuster at $35 million and Netflix at $6 billion.

Netflix-style game rentals aren't new -- GameFly, which filed for an initial public offering this year, has been doing it for about eight years -- but Blockbuster is the first nationwide service to offer DVDs and video games by mail for a single subscription fee.
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