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Blockbuster, Live Nation Reach Business Deal
2-Dec-2008
Written by: Daniel A. Russ
Consumer businesses Blockbuster and Live Nation reach a deal, enabling Blockbuster to sell concert tickets and paraphernalia.
Blockbuster, Inc. said Tuesday that it has struck a deal with top U.S. concert producer Live Nation, who sells tickets for a variety of live shows. Blockbuster, Inc. expects the deal to drive more traffic into its stories and Live Nation hopes that it will quiet customer anger over rising ticket prices and uneven availability of service.
On Monday, chief executive of Live Nation Ticketing, Nathan Hubbard, said that the deal – which was for three years, and would give retail ticketing privileges and exclusive blocks of tickets to 500 Blockbuster stores nationwide in January – had been in the works since last spring.
After tickets for the Walt Disney Co.'s Hannah Montana tour sold out seconds after Live Nation's Web site offered them online and scalping services rapidly began selling them at inflated prices, the complaints about Live Nation boiled over, and the company is now facing several inquiries on behalf of several states' attorneys general.
According to Hubbard, the movie rental chain's store footprint, national presences and its ability to “manage cross-country campaigns in a unified manner” made it the top contender for a partnership with Live Nation.
“The fan who buys his ticket offline has a lot of demographic overlap with the consumer who rents his DVDs offline,” Hubbard said to Reuters Tuesday. “On top of that, you've got now in Blockbuster a brand that has almost 100 percent awareness nationwide . . . so it's a more efficient marketing opportunity.”
Blockbuster believes that the deal will strengthen same-store sales, which showed a positive growth for the first time this year since 2003, a fact that demonstrated to Live Nation that Blockbuster was an ideal candidate for a business partner.
Blockbuster has folded “relatively minor” costs for selling tickets and cross promoting concerts into its planned capital expenditures under a plan by new Chairman and Chief Executive Jim Keyes, formerly of 7-Eleven, Inc., to reinvent it as a chain of “convenience stores for entertainment.”
Although both companies expect the business model to grow slowly and over time and to spread slowly from one store to the next, they both also expect it to burgeon into a powerful marketing and sales machine, which will sell not only DVD rentals and concert tickets, but also concert paraphernalia and downloads of digital music and videos from the in-store kiosks found inside of Blockbuster's stores.
After changing its focus from costly online subscriber-based models to in-store sales, the chain posted same-store growth of 2.9 percent, 14.2 percent and 5.1 percent in consecutive quarters despite a deepening global recession.
“The current reinvention of Blockbuster is all about convenient access to media entertainment,” Keyes said. “That gives us a much broader canvas from which to work and we believe . . . that the consumer also will allow us a broader relevance.”
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