Blockbuster to Expand Into Music, Books and Photo Printing

The high speed Internet may not have harmed the revenues of the television networks as much as forecast years ago, but its impact on the video rental stores is very clear. In a world in which one can burn movies off the Internet onto a DVD, or purchase DVD movies as easily as buying bread and milk, the role of the video libraries and video rental machines is steadily diminishing.

Blockbuster Israel is well aware of this problem. In order to contend with declining receipts from movie rentals, the company decided a year ago to sell movies, too, and to develop other activities such as VOD (Video On Demand, direct to the TV set). Now, the chain's CEO, Ofer Levi, is redefining the company's goal. Video libraries belong to the past, and the chain now views itself as specializing in "home entertainment."

"We are looking for ways to expand our sources of revenue in everything connected to home entertainment," says Levi. "We are operating in a field that includes movies, music and books, and there is no reason to distinguish between them."

This thought translates into the sale of books at the chain's 14 outlets. Still, the stores' shelves offer a limited number of titles, mainly best-sellers, but the addition of more shelves is planned with the approach of Book Week, and the chain will start selling dozens of titles that will be purchased directly from the publishers.

The music and computer game sections will also soon be expanded, and Blockbuster will start selling MP3 players. The investment in computer games is even more significant - next month the chain will launch a line of "Buster Game" computer games that will be sold only at Blockbuster stores.

This expansion of product lines will increase Blockbuster's competition with the bookstore chains, music stores and chains like Bug, which specialize in computer games. Still, Levi feels Blockbuster is distinct from its competitors. "I don't think there is another chain that focuses on home entertainment," says Levi. "The video rental field will not look the same in another two or three years."

Blockbuster currently has 14 branches, but a substantial share of the chains revenues come from its 250 automated machines for renting video cassettes and DVDs. "Our big challenge will be to harness the videomat machines to the home entertainment field," says Levi.

Levi also notes that the videomats will play a decisive role in the chain's entry into the digital film field, and that Blockbuster is currently working on the development of a machine that will combine digital photo printing with video rentals.

"People will come to the videomat to print photos from their digital cameras or cellular telephones," says Levi.

Blockbuster Israel's annual receipts are about NIS 100 million. Levi believes the expansion of operations in the home entertainment field will boost the company's growth.

"We are anticipating 25-percent growth in the next two years, thanks to this activity," says Levi, "and of course to compensate for the expected decline in the chain's traditional operations."

Levi also spoke of Blockbuster's activities in VOD field. In the past, Levi had told Haaretz that he had applied for a permit to set up a VOD company that would supply services to the cable or satellite companies. In the meantime, the cable companies have launched the service without Blockbuster. At present Levi is not interested in expanding on the company's plans in that direction, but did say this field is extremely important to the company's expansion.