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BLOCKBUSTER THINKS BIG IN VIDEOGAMES ENTERTAINMENT GIANT EYES THIRD MAJOR RETAIL PRESENCE

By Published on .

Next up for Blockbuster Entertainment Corp.: videogame stores.

The entertainment giant that is still best known for video rental stores is making a strong push into music sales, and videogames won't be far behind.

"It's a big opportunity that we want to take advantage of," Jim Hilmer, senior VP-chief marketing officer, told Advertising Age. "We plan to be as dominant in the retailing of games as we are in the retailing of music and video."

Larry Gerbrandt, an analyst with media research company Paul Kagan Associates, Carmel, Calif., said the move makes sense. Because consumers already have purchased TVs and VCRs, the newest item to have in the coming decade will be videogame technology.

"Videogames in many respects will be the home video phenomenon of the '90s," he said. "It's where the consumer electronics companies are concentrating their energies."

Although the master plan for a third major domestic division has yet to be completed, Blockbuster does intend to open six 3,000-to-4,000-square-foot videogame sales and rental stores by Febru-40

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ary or March in malls and other "impulse areas," Mr. Hilmer said. He wouldn't disclose further details on location.

In November, the company began testing five brands of CD-ROM videogame hardware and software in 57 of its San Francisco area stores.

A TV campaign for videogame rentals within traditional Blockbuster stores, featuring Miami Dolphins quarterback Dan Marino, broke just before New Year's.

For now, the marketer is focusing on the Blockbuster Music Plus retail store rollout. Ten stores are open nationwide, a number that Mr. Hilmer said will hit 300 by yearend with a goal of more than 1,000 within five years.

National TV spots will break when the "critical mass" of store openings is reached; Mr. Hilmer wouldn't specify a number.

As of Oct. 1, 1993, Blockbuster Video operated more than 3,300 outlets worldwide. Through the third quarter the company generated corporate and franchisee revenues of more than $2.02 billion, up 47% from the same period a year ago.

Since December 1992, Blockbuster has built itself into the third-largest music retailer in the U.S. through acquisitions of 507 Sound Warehouse, Music Plus and Super Club Retail Entertainment Corp. outlets, as well as a joint venture with Virgin Retail Group to develop Blockbuster Virgin Megastores worldwide.

Last year, the company also bought a 35% interest in Republic Pictures and more than a 70% stake in Spelling Entertainment.

And Blockbuster is currently negotiating to build a 2,000-plus acre sports and entertainment complex in south Florida.

Expansion into music retailing, amphitheaters and family entertainment centers prompted Blockbuster's decision to move its $100 million account to D'Arcy Masius Benton & Bowles, St. Louis, last month from longtime agency Bernstein-Rein, Kansas City, Mo. (AA, Dec. 20). The decision reflects D'Arcy's proven history with such brands as Budweiser and M&M/Mars, Mr. Hilmer said.

The agency must now execute the theme at a "higher level" than was being accomplished under Bernstein-Rein, he said, and turn the company's torn ticket marquee into a recognizable "trust mark."

"We want to be a major, major factor in America, and we needed somebody who could go along with us," Mr. Hilmer said.

William Melzer, general manager of D'Arcy's St. Louis office, said the agency's sophisticated international network operations are well suited to Blockbuster's needs.

"They match up very well with our capabilities," Mr. Melzer said. The agency is anxious to investigate new-business opportunities both with the international operations and franchisees, he said.

In the short term, Blockbuster hopes to create advertising that boosts same-store sales and supports the opening of new stores, now averaging one a day, he said. The agency's first TV campaign for video should break at the end of March.

"It will carry `Make it a Blockbuster night,' but I will insist that it take it to a level beyond where we are now," Mr. Hilmer said. "[I want] people to say, `Hey, that's a full-fledged entertainment company,' as opposed to how people once referred to Blockbuster as a video chain."

Though the agency only oversees domestic advertising, and international reviews are conducted in-country in Mexico, the U.K. and Australia, Mr. Hilmer said "they have a hunting license to get it everywhere else they can get it."

Stateside, new advertising will take the company "to a high point" in an attempt to create "significant" same-store sales growth, he said.

While the product packaging won't change, stores currently are undergoing alterations. Two prototype video stores opened recently in Jupiter, Fla., and Atlanta, and feature "some pretty radical video store designs," Mr. Hilmer said.

"It's not just we're going to drive more people to our current stores," he explained. "We're going to make them better and better."M

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