BLOCKBUSTER PREMIERES REVAMPED PROGRAM IN TEST MARKETS

DAN ALAIMO

DALLAS -- A test of a drastic reshaping of Blockbuster Entertainment Group's marketing and merchandising programs is under way in six markets, with some big surprises in store, according to industry sources.

Under the umbrella slogan "Go Home Happy," Blockbuster here is testing several new concepts, the most notable of which is a radical reconfiguring of its new-release wall to devote as much as one-quarter of the space to four guaranteed-availability titles. (That is, if a customer cannot find one in stock, he can rent another title free.)

Test markets include Tampa and St. Petersburg, Fla.; Sacramento and San Diego, Calif.; and Phoenix, sources said.

Karen Raskopf, a Blockbuster spokeswoman, confirmed those four cities but declined to name the other two. Inventory of the four new-release titles is being increased significantly in the 300 stores in the test, she said.

Raskopf admitted that customer dissatisfaction was a consideration, saying, "With the program, our plan was to take a look at the various elements that go into the video-rental experience. Our goal in this is 100% customer satisfaction."

Blockbuster's changes, introduced by a full-page letter from John Antioco, chief executive officer, in editions of newspapers in the test markets, are seen by many in the industry to have far-reaching implications for the future of video marketing, merchandising and distribution.

"The industry has got to throw some excitement into this business," said a video distribution executive who asked not to be identified. "They have to make the products customers want more available when the customer wants them."

"The program's impact on consumers will be to cause a degree of excitement and interest in video rental that perhaps has been lacking in the recent past," said Des Walsh, vice president and general manager of SuperComm. Other retailers will be able to "ride the coattails" of the Blockbuster program, he said.

Bill Glaseman, video specialist at Bashas' Markets, Phoenix, said that so far Bashas' had not seen any negative impact from the Blockbuster program.

He said he was skeptical about Blockbuster's ability to make money from the added copy depth on new releases. "It seems like it would take a lot of customers to come in and rent them for Blockbuster to get their money back."

While Warner Home Video, Burbank, Calif., was expected to be the primary partner in a revenue-sharing test, huge depth of copy on two titles from other studios was front and center in stores in the Tampa and San Diego markets.

Stores had as many as 300 copies of "Face/Off" from Paramount Home Video, Hollywood, Calif., and "Fifth Element" from Columbia TriStar Home Video, Culver City, Calif. In a Lakewood, Ohio, store not involved in the test, the retailer carried 40 to 50 copies of these titles.

That kind of copy depth usually indicates a shared-revenue program of some kind. A spokesperson from Paramount, however, denied involvement in a revenue-sharing test with Blockbuster. A Columbia TriStar spokesperson declined to comment.

Some industry observers said it was possible Blockbuster bought the titles at or near full rental price just to get the test program going.

Other early titles in the Blockbuster test were sell-through-priced movies "Jingle All the Way," from Twentieth Century Fox Home Entertainment, Beverly Hills, Calif., and "The Lost World: Jurassic Park," from Universal Studios Home Video, Universal City, Calif. Their presence was considered less significant by industry observers, however, because retailers often bring in large quantities of such lower-cost titles.

In one Tampa-St. Petersburg-area store, an industry source there said, Blockbuster had taken 28 linear feet from the new-release section and devoted it to the four titles in the new program. It is the most prominent merchandising element in the store, he said.

He added that the center floor, containing catalog and other products, had not been reset, which indicated a cutback on other new-release copies.

A large sign above the section read "Featured New Releases. We'll Have It. Guaranteed." The theme is echoed with signs on the front windows and a large standee right inside the entrance.

Rental rates may be different in the various test markets, and Raskopf confirmed Blockbuster was experimenting with pricing. In Tampa-St. Petersburg, Blockbuster is getting $3.49 for titles in this program, while other new releases are $3. In San Diego all the new releases are $3.

Other aspects of Blockbuster's new marketing efforts include longer rental periods, courtesy telephones in stores and incentives for the early return of new releases.

Rick Ang, a buyer at Video Mart, Sacramento, Calif., which racks video departments in 17 Bel Air supermarkets, said he will watch the test closely and increase copy depth in a competitive way relative to the size of his departments. Noting that Blockbuster will have to cut back on other titles to fit all the featured new releases in, he said, "We are going to buy a few more pieces of the titles that they are not presenting."

Meanwhile, consumer awareness from a Blockbuster TV ad campaign, featuring comedian Richard Lewis, will help all video retailers, he said. "The consumers realize that the movies are exactly the same, whether they come from Blockbuster or somewhere else."