Now Playing at Blockbuster: Catch 22

Marketer Finally Has Something to Advertise -- but Not Much Money to Advertise With

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NEW YORK ( -- Oh, the irony. Blockbuster finally has a point of differentiation to advertise and strong creative to engage consumers, but it may not have the money to invest in marketing.

The Blockbuster spot '28 Days' ran in Charlotte for about six weeks and introduced the tagline, 'Less Waiting. More Watching.'
The Blockbuster spot '28 Days' ran in Charlotte for about six weeks and introduced the tagline, 'Less Waiting. More Watching.'
The movie-rental giant has until Sept. 30 to pay back $42 million of its $1 billion in debt and the Los Angeles Times is reporting that the company is considering bankruptcy. At the same time, it has been testing creative around three different themes in Charlotte, N.C., Reno, Nev., and Columbus, Ohio.

The most interesting is creative touting Blockbuster's ability to deliver new releases 28 days before rivals Netflix and Redbox. That deal only applies to Universal, Fox and Warner Bros., but Blockbuster has said it's been a boon for business.

The spot "28 Days" ran in Charlotte for about six weeks and introduced the tagline "Less Waiting. More Watching." Humorous scenarios include a flight being delayed 28 days and a restaurant telling a couple their table will be ready in 28 days. Then, a voice over asks, "Why wait 28 days for new releases? Blockbuster has hot new releases ... 28 days before Netflix and Redbox."

"While Blockbuster continues to struggle under a mountain of debt, its marketing efforts have also improved notably and finally convey an edge for Blockbuster," wrote Richard Greenfield, an analyst with BTIG Research. And though he questioned whether the "28 days" message would hit home with consumers who can still find new releases from other studios such as Disney, Sony, Paramount and Lionsgate simultaneously at Blockbuster and its rivals, he called it "the best Blockbuster ad in years."

A second ad, "25 Years," has been running in Columbus, Ohio, and promoted discounted DVD rentals in conjunction with the company's 25th anniversary, which is this year. The third ad, "Recorder," which ran only on radio in Reno, Nev., promoted a three-month pass for $49 that gave consumers unlimited video-game rentals with no late fees.

Havas' Euro RSCG, which took over the Blockbuster account last spring, is handling the creative. A spokesman said he couldn't confirm when more work would be coming. He also declined to comment on the agency's exposure if Blockbuster were to declare bankruptcy.

Blockbuster did not respond immediately to a request for comment.

Blockbuster's 28-day window from Hollywood is a mixed blessing: It gives the company a major competitive advantage in marketing against Redbox and Netflix, Blockbuster's biggest competitors, but it also presents a branding issue the company literally can't afford to promote. Blockbuster CEO James Keyes acknowledged as much during the company's first-quarter conference call.

"Ideally, we'd support these new release windows with aggressive advertising. But, given the continued need to manage the business to maximize liquidity, we've been unable to spend incremental dollars to date or significant incremental dollars at least on advertising," Mr. Keyes said. "We do believe this is a significant opportunity going forward. And for the first time in many years, we now have a tangible advantage to communicate, and we hope that additional funds and studio co-op advertising can be used to promote this advantage."

Blockbuster spent only $8 million on measured media during the first half, according to Kantar Media. And unless the company can show creditors the impact the ads are having, its unlikely more marketing funds will become available, said Michael Pachter, an entertainment retail analyst for Wedbush Securities.

"If you look at the new releases in a Redbox ad, you wouldn't know 'Killers,' 'Solitary Man' and 'Prince of Persia' were available at Blockbuster unless you actually went there," said Mr. Pachter. "Their creditors will say, 'What will that cost us for a nationwide rollout?' And unless they can demonstrate a meaningful uptick in revenue, I don't think that'll happen."

What the marketer isn't saying in the ads, however, is that Blockbuster charges a $5 rental fee for the convenience of seeing those new releases four weeks before its competitors -- perhaps too steep a price to pay for customers who already subscribe to Netflix or are willing to wait to see the same movie for just $1 from Redbox.

Netflix added another 1 million subscribers last month to its total subscriber base of more than 15 million, while Redbox saw revenue grow by 44% to $272 million during the same period, thanks to the addition of 7,000 new in-store kiosks. Blockbuster, meanwhile, reported a $69 million loss for the second quarter compared to a $37 million loss a year ago.

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Contributing: Andrew Hampp

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