DALLAS - In his corner office 32 floors above downtown, Blockbuster CEO James Keyes pulls out his phone and starts up last year's Oscar winner, "Crash," to demonstrate his vision of the movie-rental giant's future.
Customers, he said, will oneday soon go to kiosks in Blockbuster stores to burn movies to a disk or download them directly to phones or other devices.
Technology is usually seen as Blockbuster Inc.'s enemy. Why would anyone drive to a store when they can order online and have movies mailed to their home or transmitted to television sets by video on demand?
Mr. Keyes said store rentals will be an important part of the business for at least five more years. If Blockbuster can remain the world's biggest movie-rental company during that time, it will be in stronger position to lead when viewers routinely download films, he said.
"This is an industry in transition and a company that hasn't been able to keep up with that change," said Mr. Keyes, named CEO in July.
Blockbuster, with 8,000 stores, lost over $4 billion from 2002 through 2005. The Dallas-based firm eked out a $54 million profit in 2006, but lost money amid further sales declines in the first nine months of this year.
Mr. Keyes said in the next few months, Blockbuster will test new store layouts with kids' areas and beverage bars. It will also test "various forms of price increase," including incentives to return DVDs sooner.
Some stores will get kiosks that later could be used to download movies, though their functions will be limited at first.