Blockuster Video, that one-time killer of the Ma & Pa video rental store, is in a tough bind. Having received a going-concern warning from its auditors in April, it has been trying to show investors that it has a real plan to turn its fortunes around.

It hasn’t been easy.

First, it’s getting walloped by Netflix, which owns mail-order rentals. Netflix is powerful enough to have beaten back Walmart’s nascent attempts to carve-out a corner of mail-order for itself. Next, Coinstar’s RedBox kiosks have provided cash-strapped consumers with an affordable alternative to the steep rental (and penalty) fees associated with Blockbuster.

So what’s the plan? Get ready for it: all those enormous stores are a good thing. Far from being a drag on profits, its stores will provide consumers with something the competition cannot: choices–

Thursday, the company will announce that if Blockbuster customers want a movie that isn’t available at their local store, they have another option: Blockbuster will mail the movie, on a rental basis, even if the customers don't subscribe to the company’s by-mail subscription plan, and charge the in-store rental price.

In addition, the company announced Wednesday an iPhone application that will let Blockbuster customers check in-store availability and manage their online movie queues.

“It’s not always about price,” says Mr. Keyes, who led the turnaround of convenience retailer 7-Eleven in his days as chief executive there. “It’s more about value, being able to provide a whole package. That’s where we think Blockbuster will prevail.”

I doubt the market– or consumers –will perceive the value proposition in quite the same way. The notion that a customer who visits a Blockbuster store only to find their intended video out-of-stock will be impressed by the fact that they can–

1. Wait in line
2. Place an order with a clerk
3. Receive the intended video several days later in the mail

–is highly doubtful. If I were to visit a video rental store and was unable to find the video I wanted, I would go home and look for it on Netflix’s innovative Instant Viewing service, which allows me to stream the movie right to my TV.

Or, better yet: I would avoid going to Blockbuster at all.

Let’s see if anyone buys this Jedi mind-trick.

via Blockbuster Tries to Recast Itself – WSJ.com.