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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.
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