'Dark Knight' expected to bolster rental revenue

Blockbuster said that rentals rose last month despite a weak slate of titles and tough retail climate. Topper Jim Keyes projected further gains in coming months as Americans opt to stay in and make it a Blockbuster night with greater frequency.

“Generally speaking, we think there might be a slight benefit to our business,” topper Jim Keyes told Wall Street analysts on Thursday.

The stepped up activity couldn’t come fast enough for the ailing chain, now in the middle of a makeover. It reported a 2.7% drop in revenue to $1.2 billion during the third quarter. The net loss for the period narrowed 48.3% to $17.8 million.

The third quarter was a tough one for the vid biz due to especially weak titles during August and further competition from the Olympics. However, a slew of big hits are on the way, including “The Dark Knight.”

“We’re looking forward to the holiday season,” Keyes said, citing the “great entertainment value” of DVD compared to other diversions, and the sheer volume of summer B.O. hits yet to arrive.

To reduce the seasonality of the movie rental biz, the chain has been beefing up its videogame stock and adding revenue generating features like beverage bars. It is also testing a variety of pricing schemes, including day, weekly and monthly rentals, and Keyes said that the flexibility seems to appeal to customers in this economy.

The chain has also devised a “Plan B” for it debt financing. If the credit crunch continues, Blockbuster is prepared to “self-finance” itself by cutting back on capital expenditures and store makeovers.

Keyes also reported that Blu-ray rentals are increasing, but still only accounts for 2% of domestic rentals. To help boost the biz, the chain is offering rentals of Blu-ray players.

“Blu-ray growth is still in the very, very early stages,” he said. “It’s incremental.”

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