Last month BB signed an agreement with RENT which should do some great things for Blockbuster's cash flow. Instead of having to purchase each video from the studios for $60+, they will be able to rent the tape for as little as $8.00 per tape and receive 45% of the revenues on each tape.
A Wall Street Journal article reported that the 45% of the revenues would go to the studios and 10% to RENT. I never realized how many times a single tape would have to be viewed by a customer for a video store to just get its cost back.
With this system, BB gets all of its money back after 3 viewings and begins to share in a revenue stream. It will be interesting to see BB's bottom line 6,9 12 months from now. (I believe they just ordered their first movie from RENT so it will take awhile before the majority of BB's inventory is rented through RENT and not purchased. Several studios have signed with RENT and it is believed most eventually will.)
Release from last month:
>>>Rentrak(R) to Supply Services to Blockbuster(R)
PORTLAND, Ore., March 5 /PRNewswire/ -- Rentrak Corporation (Nasdaq: RENT) announced today that it has entered into a multi-year agreement with Blockbuster Videos, Inc. under which Rentrak will become another source to Blockbuster of pre-recorded video cassettes on a revenue sharing basis.
In conjunction with the execution of the agreement, Rentrak issued warrants to Blockbuster to purchase up to 1.0 million shares of Rentrak common stock at an exercise price of $6.59 per share.
Rentrak is the world's largest non-traditional distributor of video cassettes. Over 6,500 outlets throughout North America stock cassettes leased through Rentrak's sophisticated information processing, electronic ordering, and automated auditing system. The titles of over 30 suppliers are offered to retailers who use the PPT system to obtain cassettes at an initial cost which is a fraction of the usual distributor charge. Rental revenues are then shared with the company, which in turn, remits a portion to the program suppliers. Rentrak may be accessed at www.rentrak.com.
Blockbuster operates nearly 6,000 video and music neighborhood entertainment stores in the United States, its territories and in 25 other countries, and may be accessed internationally at www.blockbuster.com. Blockbuster is a unit of Viacom Inc., (Amex: VIA.B) one of the world's largest entertainment and publishing companies and a leading force in nearly every segment of the international media marketplace.
SOURCE Rentrak Corporation
CO: Rentrak Corporation; Blockbuster Videos, Inc.; Viacom Inc.
ST: Oregon
IN: ENT
SU:
03/05/98 15:28 EST prnewswire.com>> |
