Speaking at an investor event in New York, Blockbuster CFO Thomas Casey said that the recent deal between Netflix and Warner Home Video delaying availability of WB new DVD and Blu-ray releases at Netflix for four weeks (see blu-ray.com,
January 6) grants Blockbuster additional revenue potential. “It clearly is good news for us, in a sense, we now have product that Netflix won't have for that 28-day period,” Casey said.
Instead of implementing an availability delay, Blockbuster has agreed on increased studio margins, which under the new revenue-sharing scheme will be now 40% for physical distribution and 60% for electronic distribution.
Casey said 80% of the company's revenue comes from new releases. This, he added, emphasized the importance of having as many available copies as possible during the first 14 days after street date. In-store availability has increased from 10% to 80%, based on 150 copies of a new release per store.
Currently, Blockbuster operates approximately 3,600 stores but plans to reduce that figure to 3,200 stores in the course of 2010, while expanding Blockbuster Express kiosk operations. Casey said that store closures are supported by the fact that just 35% of Blockbuster stores generate about 80% of pre-tax earnings.