RENTAL ROUNDUP 1998-03-30

Fred Meyer Offers Space to BlowOut

tores has signed an agreement with BlowOut Entertainment that will allow BlowOut to open leased-space video departments in Fred Meyer stores. Both are based here.

BlowOut already operates store-within-a-store departments inside supermarkets of Ralphs Grocery Co., Compton, Calif., a chain Fred Meyer recently acquired. BlowOut also has video departments in Wal-Mart and Kmart supercenters, and has been ranked as the 10th largest video-rental operation in the United States.

This follows news that Culture Convenience Club, Tokyo, which owns 24.9% of BlowOut's stock, agreed to provide $1.5 million in convertible debt financing to help fund expansion this year. Since rapidly expanding to more than 150 Wal-Mart supercenters and 35 Super K centers by the end of 1996, BlowOut's ability to sustain this growth has been limited by financial concerns, according to industry observers. Fourth-quarter and year-end results for 1997 reported by BlowOut have been encouraging, with same-store sales increasing 19% in December over the year before.

Divx System Test In San Francisco

RICHMOND, Va. -- Digital Video Express L.P., in which retailer Circuit City owns a majority interest, will test the controversial Divx limited-play system in San Francisco, according to press reports. The news follows a statement by Divx president Paul Brindze at the San Francisco convention of the National Association of Recording Merchandisers that a West Coast competitor of Circuit City, Good Guys, Inc., Hayward, Calif., will carry Divx.

The test will take place in the late spring. Divx also will be tested in one or two other markets, according to industry sources. A company spokesman denied speculation at the show that Boston may be one of them.

Divx is a form of the new digital video-disc technology that limits play to 48 hours after it has been put in a special player that costs $100 more than a standard DVD machine. Additional viewing time may be obtained through a modem hookup. Divx discs are expected to sell for less than $5.