Tough day for Blockbuster. After the quarterly earnings call this morning (yes, it was today -- I had the date right but not the day) they announced that Nigel Travis, Blockbuster president & chief operating officer, resigned.
Hacking Netflix reader Aron had the following observations about the Blockbuster call:
1) Blockbuster claims an add rate of 10K subs/day. At 900K per quarter this would exceed Netflix's best ever Q104 rate of 762K.
2) Blockbuster will increase its DC's from 10 to 15 this quarter, and 15 to 20 next quarter. Their growth is even more phenomenal considering their lack of 1-day coverage area.
3) Blockbuster claims that use of their free coupons is extremely high and that these customers are indeed buying/renting product when they come into the store. Therefore, despite losing ~1$ per coupon, they are getting that money back through additional merchandising.
4) Blockbuster claims that 50% of their online customers had not used a store in the last 12 months.
5) Blockbuster claims that online customers who were store users are now spending more then before in total.
6) Rental gross margin continued to increase, this is counter to what one would expect as subscription models take root. The subscription model is a comparatively high revenue/low margin model.
7) Blockbuster continues to aim for 500K subs end of year.
8) They did not pin point or refine the timeline for store-based fulfilllment (still "in 2005"). They did seem to make clear that video game rentals as part of the program will come after store-based fulfillment (if it comes at all).
9) They appeared to waffle on whether they would actually introduce a full store and online buffet: 1 plan, unlimited rentals in both places. I can see the plan structure and pricing problems they have with that.
10) It's important to note that while the rental component of Blockbuster's business is declining, the retail of games and movies has been performing quite well. This helps to slow Blockbuster's death.
Thanks to Joe for contributing to this story.