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Blockbuster to Test Prices, Store Formats

New York City, Blockbuster Inc. said on Thursday it plans to test different models for pricing and store formats, according to a Reuters report.

CEO Jim Keyes said Blockbuster would experiment with store layouts to add downloading stations, books or beverages in a bid to shore up its customer base. He expects the new emphasis on stores to turn around falling same-store sales and rental revenues. But he said that change would not come in the fourth quarter, nor would the initiatives be "an overnight success."

The company was looking at recapturing some of the revenue it lost when it abolished late fees and allowed some online customers to exchange DVDs for free at its stores, Keyes said. Tightening the number of days that customers can keep films also will help boost in-store inventory and mend Blockbuster's reputation for being out of stock on first-run titles.

Blockbuster posted a wider quarterly loss on Nov. 1 as it closed stores around the world. It has since focused on boosting sales at its remaining stores and keeping away from its online battle with Netflix Inc.

Blockbuster is looking for promotional partnerships with movie studios and manufacturers for exclusive product tie-ins, such as proprietary toys or beverages linked to DVD releases, Keyes said.

To avoid being saddled with excess inventory, Blockbuster plans to negotiate risk-sharing arrangements with the studios and use management systems at its U.S. stores to let local store operators manage product assortment and inventory.

Ideas for its retail format include creating an interactive area in stores for children, a destination for downloading entertainment onto portable media devices or a kiosk for Sony Corp's PlayStation 3 video-game console. Another option was to place kiosks in high-traffic areas such as airports or shopping malls, Keyes said.

To that end, Blockbuster planned to cut back on advertising for the next six months as it formulates its new plans and evaluates its current marketing strategy, Keyes said.

The company also seeks ways to build up digital distribution for films, including merging its Blockbuster.com Internet site for ordering films by mail with its Movielink download service, and partnering with telecom and cable companies, Keyes said.

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