Blockbuster Touts 2 Mln Online Renters

Struggling video retailer Blockbuster announced that it succeeded in meeting its 2006 year-end goal of signing up 2 million subscribers to its online video rental service, hoping to show that it can stll flex its muscles alongside online video rental success Netflix, which boasts more than 6 million subscribers.

“We are pleased that we achieved our year-end goal of 2 million subscribers, an addition of more than 500,000 paying subscribers since the end of the third quarter. We credit our success to Blockbuster Total Access, which gives our online customers the option of returning their DVDs through the mail or exchanging them at a participating Blockbuster store for free in-store movie rentals,” said John Antioco Blockbuster Chairman and CEO in a statement.

It’s not clear whether Blockbuster’s substantial marketing efforts and promotions to ramp up its online rental service will translate to new revenue opportunities for the struggling company. Although the company’s Total Access plan enables online renters to return movies to store locations instead of waiting for back-and-forth shipping, it’s not clear whether those store visits are generating revenue for Blockbuster’s brick-and-mortar operations or merely increasing their operational costs. And Blockbuster needs to find ways to improve its bottom line in the short term: the company’s credit rating has been sinking, and the firm has laid off workers and issued stock in efforts to make ends meet.

In the meantime, the company has also confirmed that it has shut down its dozen-or-so retail outlets in Peru. A Blockbuster spokesperson speaking to Reuters cited “competition problems” as the company’s reason for leaving the market, but the consensus seems to be that Blockbuster just couldn’t keep up with movie pirates: in Peru, its cheaper for many people to buy a pirated DVD than to rent a legitimate copy.

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