Blockbuster Co-Brands DirecTV PPV Films

DirecTV Inc. and Blockbuster Inc. late last week kicked off phase two of their year-old joint marketing partnership by co-branding the direct-broadcast satellite company's pay-per-view movie service as "Blockbuster Ticket only on DirecTV."

"These are two very strong brands that register very well in the minds of consumers, especially the ones who watch movies at home," DirecTV senior vice president of programming Stephanie Campbell said.

Since the two companies joined forces last year, the video-rental giant has become one of the leading distributors of DirecTV systems, Blockbuster senior vice president and chief concept officer Nick Shepherd said, adding that Blockbuster just finished a successful Memorial Day sale for DBS firm.

Blockbuster was contractually obligated to meet certain sales goals before DirecTV would allow its PPV service to be co-branded, although neither Shepherd nor Campbell would specify what those requirements were. "They did what they needed to do," Campbell said.

Last Friday, DirecTV unveiled a new on-air look for its PPV channels designed to attract more viewers to the service. The new creative will include a bigger focus on the top hit movies as they enter the PPV window, Campbell said.

More than 4,100 participating Blockbuster stores across the country also introduced the Blockbuster Ticket PPV brand last weekend through its DirecTV kiosks. The in-store displays showed the movie Space Cowboys
to browsers, reminding them that the movie had just hit the DBS company's PPV window.

Blockbuster also plans to take advantage of its large database to pitch the benefits of PPV to customers who had purchased DirecTV systems from the video-rental company.

"We believe we can double DirecTV's pay-per-view buy rates over the next two years," Shepherd said.

Although he would not say what Blockbuster's cut of the PPV movie sales were, Shepherd noted that the company's profit model for PPV was similar to that of video rentals.

DirecTV and Blockbuster have not yet explored whether their relationship will help lead to earlier PPV windows for the DBS service.

Through its DEJ Productions Inc. subsidiary, Blockbuster will give DirecTV access to content such as independent films not available on competing PPV services. The companies plan to offer double features of some of those independent films for the same $3.99 price of a single PPV movie.

"People who consume pay-per-view, by and large, consume lots of entertainment in lots of ways," Shepherd said.

The double features will be promoted through Blockbuster stores, direct mail and DirecTV barker channels, Shepherd said. The companies also will cross-promote on each other's Web sites, where viewers will "get a clear picture of what's available and when," Shepherd added.

The two companies are still discussing how to expand their co-marketing arrangement. One logical extension, Shepherd said, would be to include DirecTV's PPV movies in Blockbuster's Membership Rewards program targeted at frequent video rental customers. Blockbuster also might allow its gift cards to be used for PPV movie purchases.

Campbell said there are no definitive plans for the two companies to carry their PPV partnership into the personal video recorder world, or to DirecTV's newly acquired Telocity digital subscriber line business.

"Everything is open to discussion," Campbell said, adding that both companies are open to anything that will expand their companies while protecting their core businesses.

Because the terms of the contract are confidential, Campbell would not say how a DirecTV merger with another company could impact its relationship with Blockbuster.