Video rental company targets rival's customers

The battle between Netflix and Blockbuster ratcheted up Tuesday, as the homevid chain announced a promotion targeted at Netflix customers — literally.

Blockbuster said it was running a holiday special that would give a free rental to any customer who came in with a tear-off address label from one of Netflix’s signature red envelopes. Those sheets are normally thrown away by customers, leaving only the return envelope for viewed discs.

Customers will be required to sign up for a free Blockbuster membership, which will allow the homevid company to collect data on Netflix customers and even potentially target those customers to join Blockbuster’s own online rental service.

Promotion runs until Dec. 21; execs wouldn’t say whether they would revive it in the new year if it was successful.

Consumers can get multiple rentals if they bring in more than one label.

While handing out free merchandise to customers who collect receipts from a partner company is an old marketing idea, giving merchandise to someone who collects receipts from a competitor is highly unusual.

Netflix maintained a cool attitude toward the program, saying it didn’t think it would have an effect on its customer base.

“If your business is losing money in the stores and your online business has not made a significant dent to your competitor,” said spokesman Steve Swasey, “then this seems like one of those long football passes down the field.”

Blockbuster has been upping the stakes in its battle with Netflix over the past few months, launching a program that allows in-store returns for online renters as well as signing an exclusive pact with the Weinstein Co.

But the new program is a qualitative leap in how it hopes to slow the growth of the Silicon Valley behemoth.

Netflix continues to dominate the online-rental market, topping 5.7 million customers according to its most recent disclosure. Blockbuster hopes to have 2 million subscribers to its online service by the end of the year.

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