BLOCKBUSTER'S FAST-FORWARD;VIDEO RENTAL MARKETER CHARGES INTO LATIN AMERICA

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Buoyed by better than expected sales from its first SÌo Paulo store, Blockbuster Video is anticipating strong growth for Brazil and all of Latin America.

Following its opening last March, Blockbuster's SÌo Paulo outlet amassed first-month sales topping more than $300,000, said Steven Berrard, president of Blockbuster Entertainment Group, the Fort Lauderdale, Fla.-based entertainment company. The figure stands as the best one-month performance of any Blockbuster Video outlet in company history, he said.

"That's like hitting 100 home runs," said Mr. Berrard. "The market is staggering." For that reason, he and others at the company see Latin America as potentially the most profitable, fastest growing market outside the U.S.

At the end of the first quarter, Blockbuster operated about 1,000 stores internationally, with 235 more openings planned for 1995, said Ramon Martin-Busutil, president-Blockbuster Video International. With 670 operating in the U.K., and another 200 in Canada, that leaves Latin America's 110-plus stores as the single largest international market outside those regions. Worldwide, the company operates more than 4,100 video stores, more than 3,000 in the U.S.

Dissatisfied with the rate of growth and penetration in Mexico, Blockbuster in June announced it spent $35 million to purchase an 80% stake in Mexican franchisee Grupo Mexicano de Video. The company in August mounted a relaunch of its marketing efforts in Mexico, using Mexican agency of record Leo Burnett & Co., Mexico City. The franchisee, said Blockbuster VP-Latin America Guillermo Rotman, had not been aggressive in creating traffic programs into the stores.

The move represents a trend for Blockbuster in many international markets, said Messrs. Berrard and Martin-Busutil. Joint ventures and equity relationships, as opposed to straight franchise agreements like that held in Brazil and formerly held in Mexico, provide Blockbuster more hands-on control and oversight, especially in fast-growing markets like Mexico, they said.

"It's a matter of opportunity," said Mr. Martin-Busutil. In Mexico, "we wanted to take our best interests in our hands and grow as fast as possible."

The Brazilian franchise is owned by the Moreira Salles Group, the conglomerate involved in banking, tourism, mining and farming. Moreira Salles' July 1994 agreement with Blockbuster allows it to create up to 250 stores in the next seven years, 70 of which likely will be in SÌo Paulo, Mr. Rotman said.

"We're just beginning," added President Pedro Moreira Salles following the March opening. W/Brasil, SÌo Paulo, created print and outdoor ads supporting that city's first two outlets. Brazil TV spots likely will come when Blockbuster boosts its five-store presence to at least fifteen stores, said agency President Washington Olivetto. Blockbuster expects this to happen by 1996.

Not unlike its efforts stateside, Blockbuster is building an extensive membership database. The company has roughly 2.5 million Blockbuster card holders pan-regionally, with the majority in Mexico, where the company operates more than 100 stores, said Mr. Rotman. Already, the SÌo Paulo store has 12,000 card holders, he said.

Blockbuster's presence in Brazil has blasted its local rivals, the largest being Hobby Video, with about 20 stores, and Real Video, with fewer than 10. Brazil's 1,800 video rental outlets average 550 square feet and stock 1,000 tapes; Blockbuster's 5,000-square-foot entree into SÌo Paulo carries 15,000 titles.

Blockbuster regards Mexico City, SÌo Paulo and Buenos Aires as "critical for our expansion," said Mr. Rotman.

"Once you have a footprint in those three cities," he said, "you have a strong penetration in Latin America."

Claudia Penteado contributed to this story.

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