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BLOCKBUSTER'S CD-ROM CRASH COURSE SAN FRANCISCO TEST LEAVES CUSTOMERS CONFUSED, RETAILERS HARRIED

By Published on .

Blockbuster's experience retailing CD-ROM systems has been, well, less than blockbuster.

The video retailer since November has been testing sales and rental of CD-ROM systems in 57 San Francisco-area stores. Customers can use kiosks to learn more about CD-ROMs and then rent hardware and/or software from Apple Com-puter, IBM Personal Computer Co., Sega of America, Philips Consumer Electronics Co. and Panasonic Co.

But while Blockbuster says it's pleased with the test, scheduled to end June 30, the video retailer admits it still has plenty to learn about CD-ROM technology.

Problems arose when customers called the 800-numbers of participating companies seeking assistance with the systems they had rented, said Michael van der Kieft, Blockbuster's director of business development. The five systems each use a different CD-ROM technology.

Customers "don't get an answer, then they're irritated with Blockbuster, because that's where they rented or purchased the device," Mr. van der Kieft said. "We decided that our position was being tarnished in the marketplace as a result of the difficulty these people were having trying to get through to the help lines."

In response, Blockbuster installed an 800-number of its own and staffed it with two representatives.

"We were not prepared to do that," Mr. van der Kieft said. "Unfortunately, that's characteristic of the business right now."

Blockbuster also hired 150 system demonstrators; each store had 103 hours of demonstrator personnel on-site weekly. Mr. van der Kieft said the company likely will scale that back to 70 hours per week and integrate store personnel into the program.

Although busy 800-numbers and technical difficulties are common in the computer industry, "I don't think mass-market consumers will put up with that," said Walter Miao, multimedia analyst with Link Resources, New York. He proposed adding another layer of user interface, such as help menus or instructions embedded on the CD-ROMs, to help consumers through the system.

While Blockbuster won't reveal how many people tried the CD-ROM systems, a Gallup telephone survey of 856 people who had rented them showed that the demographics for Apple and IBM units skewed higher than those for Sega or Panasonic's 3DO, Mr. van der Kieft said.

Of those who rented the Apple Macintosh or IBM PC systems, 86% were male and the mean age was 37. Some 72% were married and 70% had children. Mean household income was $75,400.

Of the people who rented the TV set-top systems, like Panasonic's 3DO, Philips' CD-I and Sega's software, 80% were male, and the mean age was 32.4. Some 63% were married and 64% had children. Mean household income was $65,720.

Margin of error was 6 percentage points.

The difference in demographics was expected, Mr. van der Kieft said.

With the computer-based systems, "you're picking up the people who have outgrown the Sega and Nintendo games and are going to more sophisticated gaming."

The statistics would not translate well outside the San Francisco area, Mr. van der Kieft cautioned. The region is considered the nation's highest early adopter area, meaning those using the systems are more likely to embrace new technology than the nation as a whole.

Apple Computer executives were buoyed by the results and hope to be involved in future tests, said Ginger Holt, business development manager for Apple USA consumer division, who met with software developers and discussed results with Blockbuster.

Calling the test "great exposure," Ms. Holt said it helped to both "demystify" multimedia as well as acquaint people with the Macintosh system.

Apple decided after demonstrator training seminars that it should send two "roving reporters" to all test sites throughout the first three months to gauge reaction and "give us an ongoing picture of what's happening," she said.

"We knew we were stepping into the unknown with Blockbuster with this and didn't know what to expect," said Ms. Holt. "The training seminars tipped me off that it would be really good to have somebody on premises so that when it comes to Apple's offering, that we were covered."

Panasonic hopes to be involved in future tests, said Gene Kelsey, assistant general manager of Panasonic's interactive media division.

"From our point of view, if they're looking to develop this, it's certainly something we'd be interested in," Mr. Kelsey said.

Among what Mr. van der Kieft called "positive surprises," the Macintosh and IBM PC computer software rented more often than anticipated.

Also, the Macintosh system's "plug and play" characteristics made for easy use, he said. More systems will need to mimic that capability before they will be widely accepted, he added.

"We think that's a big obstacle multimedia has to deal with before it's going to be ubiquitous in the home," said Mr. van der Kieft. "It's got to be at least VCR easy, or else it's not going to be a consumer accepted product."

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