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Can Gamers Save Blockbuster’s DVD-by-Mail Service?

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Video rental firm Blockbuster (s BBI) is adding video games to its DVD-by-mail offering, hoping to attract video gamers to sign up for the $8.99 subscription service. The company is making available more than 3,000 video game titles for Xbox, Xbox 360, PS3, PS2 and Wii game systems, enabling subscribers to the service to have TV, movie and now game discs delivered through a single service.

The addition of games could help Blockbuster add new subscribers to its DVD-by-mail business, since it adds a differentiator against Netflix’s mail service, which only allows DVD and Blu-ray titles. Games also could help lower structural costs from shipping and handling in the mail business, since gamers tend to keep the discs longer than usual DVD-by-mail customers, which tend to watch a title once and ship it back.

The move to add games comes as Blockbuster faces competitive threats from Netflix (s NFLX) and Redbox (s CSTR) and has been struggling to stay alive. The company has already been delisted from the NYSE after it was unable to get shareholder approval for proposals that would help lift its stock price above $1 — a requirement for remaining on the exchange. And while it recently secured an extension on debt payments due, the latest deadline is soon approaching.

But Blockbuster’s jump into the games-by-mail business, like many of its recent ventures, seems a bit too-little, too-late. It jumped into the DVD-by-mail business after Netflix had already won that business. It added DVD kiosks after Redbox had cut into its share with its $1 a night rental service. More recently, Blockbuster has been negotiating with studios to get exclusive access to new release titles before they are available in Redbox kiosks and Netflix’s DVD library. It has even struck a marketing deal with Comcast (s CMCSA) that gives the cable company’s subscribers discounts on its DVD-by-mail service.

But in each case, Blockbuster’s effort at innovating and diversifying its business was a step behind the competition. And even though there isn’t yet a competitive service for DVD and game rentals by mail, the game-by-mail business is well established by companies like Gamefly, (s GFLY) so it could be difficult for Blockbuster to gain significant share in the market.

Related content on GigaOM Pro: Slow and Steady, Netflix Pulls Ahead in Streaming Video (subscription required)

6 Responses to “Can Gamers Save Blockbuster’s DVD-by-Mail Service?”

  1. Well I have had the Blockbuster video game plan for over a month and they have not shipped one video game. They only send out DVDs. So I took out all of the DVDs just to see if they would ship the video games. Nope. This is a fraud. I would really like to know if anyone has received any video games from the BB service.

      • There is already competators agenst gamefly
        You have Gamerang which is $17.95 for one game out Game Mine $ 14.95 for one game out GottaPlay is $11.95 and RentZero $13.95
        All good competition Rent Zero and gottaPlay is cheap 19.95 for two games out at conce compaird to gamefly 22.95 so yall do the math….

  2. They should change their company’s name to Ditto. Their business model is based on being a claim jumper and they’re not a good one at that. They need to innovate something and mine it before anyone else.