Is Blockbuster Late to the Party Again?

(MoneyWatch)  It looks like Blockbuster is piggybacking on another company's cool idea again. The Dallas-based retailer just released the details of its previously announced intention to get involved in online video game rentals.

Well, like its foray into online movie rentals, when it went head to head with rival Netflix in 2004, Blockbuster is probably headed into this space a little late. This time it is competing with a leader in this effort called Gamefly, an online retailer that offers rentals on a monthly subscription basis similar to Netflix and carries about 6,000 titles on platforms from Game Boy to Wii. At least Netflix has yet to enter the video game rental competition.

As of now, Blockbuster's strategic plan is to enter the Cleveland market and then roll the program out to the rest of the country. Eligibility to get the games will be available to all current online movie-rental subscribers.

Los Angeles-based Gamefly entered this arena in 2002. Still privately held, a company spokesperson wouldn't reveal to BNET how many members subscribe, but Gamefly does have significant national reach operating four distribution centers across the country, one each in Austin, Tex.; Los Angeles; Pittsburgh and Tampa, Fla.

A recent Forbes article said that Gamefly has 3,000 people online on most workdays and counted 9,000 comments on the site on one day. It also contended that Gamefly only got stronger in April with the acquisition of Game Answers, a social-networking site that will add content to Gamefly's e-tailing capabilities.

When Blockbuster first went after Netflix, there was some speculation that its long-time brick and mortar retailing experience in movie rentals could give it an advantage. So far it hasn't made a lot of headway. Blockbuster, which doesn't list the number of its by-mail subscribers in its financial reports, saw them decline by 28 percent during its first quarter. By contrast, Netflix members, which are at 10.3 million, increased 25 percent over the same period for the Los Gatos, Calif.-based company.

The bad news is that Blockbuster is entering a business again where there is already a dominant player. The good news is that at least they got to the video game space before Netflix.