Blockbuster Surprises Investors With 2 Million Online Subscribers

Blockbuster surprised investors and analysts with a stunning 2 million subscribers to its online Total Access service, which allows customers to return movies rented on line to Blockbuster stores. Shares climbed 6.6% to $5.64 after the news was announced on Wednesday. Netflix has around 5.5 million subscribers. Both companies see a potential online rental market of 20 million customers. There has been concern that Blockbuster stores have become superfluous in the face of online rental's popularity. Blockbuster's new program, combined with a limited offer of a free in-store rental for every Netflix mailing label customers, brought in 500,000 subscribers in Q4. Blockbuster CEO also said they expect to offer movie downloads for purchase or rental starting this year.

• Sources: Blockbuster press release, Reuters, USA Today, Red Herring
• Related commentary: Blockbuster Hits 2 Million Online Subs - At Netflix's Expense?, ABI Research: 48% Of Consumers Will Not Pay For Movie Downloads, Taiwan: Another Sad Story In Blockbuster's International Saga, Blockbuster: Sinking Stock, High-Flying CEO, Blockbuster's Year of the Dog Conference call transcripts: Blockbuster Q3 2006 Earnings
• Potentially impacted stocks and ETFs: Blockbuster (BBI), Netflix (NFLX) Competitors: Hastings Entertainment (HAST), Movie Gallery (MOVI), Comcast (CMCSA), Time Warner (TWX)

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