BLOCKBUSTER VIDEO PLANS 'DINNER AND MOVIE' TEST

AL HELLER

DALLAS -- The classic pastime of "dinner and a movie" is coming home -- in a huge way.

A new home delivery pact between Blockbuster, based here, Food.com, San Francisco, and Takeout Taxi Holdings, Herndon, Va., gives the 7,100-store specialty chain a unique claim to consumer convenience that most supermarkets will find hard to match.

Blockbuster, the ubiquitous video and video game renter, announced on March 15 it would pair with Food.com, the largest food-and-restaurant destination site on-line, to deliver meals, movies and games in a pilot program that could lead to a national effort. Beginning this summer, deliveries will be made by Takeout Taxi, the nation's largest restaurant delivery service, which Food.com has just signed a letter of intent to acquire. Food.com offers the menus of 16,000 restaurants and has nearly 1 million registered members, and is the exclusive takeout and delivery partner of America Online, Dulles, Va. Food.com also creates unique interactive Web sites for each restaurant listed on its network. The site has raised $80 million in new investments this month by a wide variety of partners, including Blockbuster and McDonald's -- as it builds accessibility from personal computers, wireless handhelds and televisions.

John Antioco, Blockbuster's chairman and chief executive officer, noted there are two factors that make wide-scale delivery of rental videos possible: Blockbuster's copy depth program, which ensures in-stocks of demanded titles, and the growing number of delivery service options, especially through the Internet.

The partners didn't disclose the initial pilot cities, but Takeout Taxi has close to 50 franchises in different markets, and Food.com plans to franchise the delivery service through the rest of the country.

"With Takeout Taxi and Blockbuster stores within a 10-minute drive of 70% of the U.S. population, the opportunities for quality, timely delivery of videos and restaurant-prepared meals are tremendous," said Food.com Chairman Rich Frank.

This is shaping up to be a double-barreled assault on the video and home meal replacement business at supermarkets, said industry observers. Blockbuster continues to invest in consumer research to dictate many of its strategic moves, since it also must secure its place in a new entertainment era.

Not only has it struck this deal because survey results show that home delivery of a movie and a restaurant meal appeals to more than 90% of active video renters, but Blockbuster has also taken on other multichannel initiatives as well.

Blockbuster has aligned with TiVo, Sunnyvale, Calif., to develop a video-on-demand-like service.

It has signed a pact with Metro-Goldwyn-Mayer, Santa Monica, Calif., to test and develop a model to make selected MGM films available for digital streaming and downloading.

Blockbuster is pursuing broadband content delivery in a multiyear strategic pact with America Online. The chain and AOL will also develop a value-added movie/game rental package unique for AOL members, who currently number 21 million.

In nearly all its corporate stores and half of its franchised stores, Blockbuster is extending return times for video, DVD, gaming software and hardware until noon the next day rather than midnight the prior evening. Due dates will also be printed directly onto sales receipts. "When we surveyed consumers, we found that 37% said they had forgone at least one rental occasion in the past three months because they didn't want to go out late to return their tape," said Nigel Travis, president, worldwide store operations for Blockbuster.