BLOCKBUSTER SHARPENS FOCUS ON KIDS' RENTALS

CHAPIN CLARK

DALLAS -- As part of an ongoing attempt to spur rental growth in children's titles, Blockbuster here has rolled out the second generation of its Play Pak licensed premium program.

Earlier this month, Blockbuster began giving away a free "Rugrats" sticker to children over the age of 3 with the rental of any children's or "family" video. The sticker and the video are packaged together in a decorative "Rugrats" plastic bag. Children under 3 get a drinking cup emblazoned with the Blockbuster logo.

"We don't want any kid to walk out of the store empty-handed," said Jonathan Baskin, senior vice president of corporate relations.

There are four different "Rugrats" stickers to choose from, Baskin said, adding that this phase of the Play Pak program is set to run through September or as long as supplies last.

"Rugrats" is a popular animated program on the Nickelodeon children's television network. New York-based Viacom is the parent company of both Blockbuster and Nickelodeon.

Blockbuster initiated Play Pak June 10 with a tie-in to the animated Disney film "Hercules." That giveaway involved four different "Hercules" pop-up books.

Regarding the results of the "Hercules" phase of the program, Baskin would say only that "it went as planned."

"I don't know with 'Rugrats,' but with 'Hercules' I think it started to wear down," said a manager of a Manhattan Blockbuster store. "After a while, receiving the same thing, kids lost interest."

She noted, however, that she had seen a large increase in rentals of children's titles due to Play Pak, although she could not give a percentage.

Baskin said Blockbuster will continue Play Pak through the end of this year and into 1998.

"Our focus is on video rental; it's the core of Blockbuster's business," he said. "[Play Pak] is to help us promote what is arguably the most extensive children's video selection in the country and also to spur incremental adult rentals."

Blockbuster has been a consistent underperformer for its otherwise healthy corporate parent. Earlier this month, Viacom announced a $323 million charge at Blockbuster attributable to excess inventory and store closings.

When contacted by SN, analysts who cover Viacom gave tepid endorsements of Blockbuster's promotional efforts and its shift in focus back to the rental side of its operation.

"They're trying all sorts of things, and they need every help they can get," said Harold Vogel, an analyst at Cowen & Co., New York. "But it doesn't solve its main problems, which are long-term and ecological."

Gary Farber, an analyst at NatWest Securities, New York, commented that "[rental] is a business that to some extent has predictable returns, and it's what they're known for. That's not the most exciting strategy, but you want to see some consistency in the business."