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The DVD Rental Race Analyzed
Thomas Hawk writes "Netflix and Blockbuster have been locked in a price war with regards to the DVD rental space. Wedbush Morgan Equity Analyst Michael Pachter has a $3 dollar price target on Netflix and is in contrast bullish on Blockbuster. Davis Freeberg challenges Pachter's thinking that Netflix will be the loser in the DVD rental battle and Pachter himself responds back on his rationale on why he thinks Blockbuster has the advantage." From the article: "Irrespective of what Pachter thinks about the overall DVD rental business, Pachter's seemingly obvious prediction would appear pretty dire for Netflix. Pacther updated his price target for Netflix On 4/22/05 with the new $3 price. If Pachter is right, then we should expect to see Netflix's stock fall by approximately 75% over the next 12 months."
I wonder how quickly Blockbuster returns videos for what percentage of the population as compared to Netflix?
The world will not get better through technology. We must seek to be better people.
I don't know a single person that uses Netflix so that's rather difficult. I also haven't heard it *anywhere* other than on Slashdot. I wouldn't even know it existed otherwise.
They have 1.5 million customers. Clearly somebody is using it. In our little corp headquarters office or 25 people I can think of 4 people who use it (myself included) and the other 3 are definitely not in the Slashdot demographic.
"I'd rather be a lightning rod than a seismometer." -Ken Kesey
I can't believe neither service rents porn movies. I think it would boost service considerably. Just keep it on the down-low. Hide it under "romance".
I worked at Blockbuster, and even while I was there, everyone hated working there. I suppose its better than fast food, but the pay sucks and so do the customers.
In the words of Randal Graves, "This job would be perfect, if not for the customers."
I come from a country (in south Asia) where they have anti-piracy laws but nobody abides by them because of the slack law enforcement. Piracy is so prevalent that if anybody buys digital content by paying money they would be considered fools. So the few sites that sell digital content target fellow countrymen settled in Europe or America. Now a handful of websites sell subscription which allows me to access latest movies. I pay about $15 for access to the latest movies which are streamed to me. Please note that these websites are illegal and have uploaded pirated versions of the movies. Now if these guys can do it, why not Netflix or Blockbuster? Why cant I pay a monthly subscription fee for online streaming movies? Its high time that they embrace the available technology.
It would be so convenient for me to just go click, click and watch a good movie. I don't have to drive all the way to blockbuster to get a copy at 1:00 AM.
fuvoo: watch something
A war of attrition (price wars) are a top cause of business failures. Read any guide to the top reasons businesses fail. A war of attrition will be listed.
Blockbuster is a fat cow. Netflix will die by the very sword they have drawn.
Offer what the others don't, and offer it at a good price. It doesn't have to be the lowest. I buy from NewEgg not because they have the best price, but because I get what I ask for and they are quick to fix it if I don't.
If you have a widescreen HDTV, Video on demand sucks. All the video on demand I've seen in my area from Comcast, is crappy, standard 4:3 format, and has bad artifacts. It looks just like standard digital Cable or Satelite signal, which ain't great on a 55 inch widescreen.
At least with a DVD, I can play anamorphic Widescreen with 480 progressive scan DVD player and get something that looks half-way like the movie in the theatre. DVD still has artifacts, but they aren't nearly as bad as Video on Demand.
Blockbuster is a joke. An extremely bad joke. Netflix gives me a three day turn around, e.g., I mail on Monday, they receive it and mail a new one on Tuesday, then I get it on Wednesday.
Compare that to Blockbuster that gave me about a 18 day turn around. About 9 days to get my returned DVDs. About 9 days to get new ones back. It was ludicrous! Here's an even better example: Two months after quitting I get an email saying they finally received one of the DVDs I had sent out OVER two months prior!
Blockbuster is SO bad I seriously think it's a ploy to make internet/DVD rental services look back to protect their brick and mortar stores.
If someone says he and his monkey have nothing to hide, they almost certainly do.
Is this really illegal? It seems like a great niche for amazon. Sure its quite obvious that 98% of people renting music will be burning copies, but the same argument can be made for Netflix and GameFly . (Or could be made in the not-so-distant future. ) Is someone offering this? (DRM'd music downloads don't count.)
I have been one of their early customers and I must be responsible for at least 7 or 8 other Netflix accounts being open.
I agree they have excellent selection. Service, on the other hand... what are you smoking ?
I am a high-turnover user. I have been born and raised in a former communist country and only came here some years ago, so I have never had the opportunity to see almost any good movie until I moved to the US. As a consequence, I have a big backlog of movies on my must-see list and I try to watch them ASAP and then return them so I can quickly get my next one. My wife shares my account and situation too (we have the 3 out subscription).
In the last year or so, and clearly worsening over the last 6 months, they are dragging their feet. It used to be that they would deliver my next movie the same day they received one back. Now the average is 2 days of waiting until they ship the next one. Add the fact that they only operate during the business days, the mail time and you'll realize that they have effectively decreased the number of movies I can see by 50%.
I was always aware that they have this built-in conflict of interest where the flat rate caps the money they make monthly and their expenses raise with the number of movies you rent, but they did not behave like this at the beginning. Now, they do - and any rational person must admit that this is a calculated attempt to improve their profits.
Nothing wrong with profits, after all - except that they advertise unlimited movie rentals and then they effectively impose a cap on the number of rentals by doing this. Also, it is short term thinking, because while I still have my account open I am pretty close to the end of my patience (how long can you hope it's only a temporary phase?) and I have already started to warn all my friends about their tactics.
My only guess is that they want to show profitability NOW and to heck with the consequences, but they are harming themselves immensly in the long run.
They only had to keep doing the right thing for a few more years until the DVD was obsolete, and they would have had a huge pool of happy users to transition into the next big thing (whatever the next movie rental model is). They chose to annoy their best promoters, people like me and I think the company will live to regret that decision. I'm sure that the executives will have cashed their stock options by them and will not care, but I miss the Netflix that I first met and which is no more.
Enough sentimentalism - happy posting, y'all.
"Besides who wants to wait 3 days for a movie that you want now."
The millions who have signed up for these services, who else moron! And let me ask you this, is the movie going to suck after a three day wait? A great movie is a great movie whether it's Monday or Wednesday.
And you don't even understand the service, you're constantly getting movies. For example, I'm getting about 14 movies a week for less than 70 cents a movie. Does your local store offer that kind of deal?
And lastly, does your local video store offer nearly EVERY DVD ever made?
If someone says he and his monkey have nothing to hide, they almost certainly do.
Netflix, Amazon, Google, Apple and others get this, while, for example, Enterprise Rent-A-Car definitely does not. See http://www.failingenterprise.com/.
The assumption that Netflix does not have physical distribution methods (such as Blockbuster stores) is just plain wrong.
The reality of physical distribution nodes is that Netflix has a lot - they are called distribution centers! In fact they are far better off than Blockbuster in that regard.
Yes for perhaps 10-20 titles you might get stuff a little faster at Blockbuster. However a lot of stuff people rent is not going to be something carried at your average Blockbuster - and then the advantage of Netflix becomes apparent, in that you are going to get ANY movie no matter how obscure pretty quickly. Not just the 10-20 post popular at the moment.
So basically Blockbuster has a lot of distribuition centers, but with poor stock. You can think of it like a really badly run cache management scheme, where Netflix fares much better.
And both are just idling until online distribution takes place in large quantities - I'll bet that Netflix is more nimble in this regard.
"There is more worth loving than we have strength to love." - Brian Jay Stanley
I don't know a single person that uses Netflix so that's rather difficult. I also haven't heard it *anywhere* other than on Slashdot. I wouldn't even know it existed otherwise.
I know exactly one person who uses netflix and he loves it. He was using it 5 years ago.
Cutting back hours? I don't know about that. I know of a couple Blockbusters around here and they are open the same hours they have been for years. At least you know that the movie rental places are open on Thanksgiving and Christmas.
I don't think that's what he meant. I think he means that individual employee hours are being cut back. Reduce the number of concurrent employee hours during the work week. I can't confirm that this is the case, because I haven't entered a blockbuster in about two years, but the intent of his statement is clear.
I'm just a movie watcher that doesn't like to pay a whole hell of a lot to watch a movie once.
This is the key. Circuit City misunderstood the collective mindset of movie consumers. People WILL pay to have a movie at their disposal. They will not pay to increase the bottom line of any company (except Apple, but that's another discussion).
LK
"Hi. This is my friend, Jack Shit, and you don't know him." - Lord Kano
Thanks to visionaries such as Adam & Eve's Phil Harvey, the right for a company to sell pornography, sex-toys, contraception, and other "obsecne" material over the internet and via mail-order has been upheld.
2^5
Frankly I dislike both options.
Blockbuster (at least their retail locations) are terrible. They have a horrible selection that concrentrates only on crap released in the last two months. The prices are insane and the employees utterly clueless.
Netflix has a much better selection, but it's still lacking. I don't get to select exactly what I want due to the list system and quite frankly I'm pretty damn picky about what I'm in the mood for. The turnaround time is also pretty bad. I want to select the movie that I feel like watching now, not a movie that I kinda want to see so I'll leave it around the house for a week or two until I'm in the mood and want to watch a movie.
My local video store, however, has a great selection (though anime fans may appreciate their huge selection I'm far less appreciative when they shove aside horror to make room for it), generally knowledgable employees, excellent prices (almost everything is $2 for 5 days, new releases are $3 for 3 days, a few are $1 for 5 days) and are cunningly located (the main location is next to the cheap pizza place, they're also smart enough to have a drop-off bin on campus). One of the few times they haven't had something that I asked about the employees said "Wow.. we don't have Foo? I can't believe that, we need to order it." Lo and behold it was on the shelf there not long after. It's also the little things. If a film is not a new release, but rather an older film just recently released onto DVD it does not go on the new release wall like so many other locations. The owner once dropped off my lates fees when I went to pay them off citing that they were only a few hours late. Employees regularly let me skirt the drop-off time (ingeniously 7pm so that the new movies are on the shelves when you come by to rent) if I'm a little bit late. They carry porn (though a really crappy selection and heavy on hentai).
I could go on and on, but quite frankly a good local shop will always win out over either a giant, crappy chain or a mail-order service in terms of giving the goods. Now, if you want something really obscure (not everyone is blessed with a store that has their own Troma section or carries the Short Films of David Lynch box) Greencine or some other option might help you find what you're looking for, but I doubt it'll be a primary rental location.
Don't get too carried away with assuming that Blockbusters are typically so far from people. If you're rural, sure. But, lots of people live in medium to large cities that have much shorter drives to Blockbuster. I'm in a city of about 110,000 (Fort Collins, Colorado) and have 2 Blockbusters within a mile of my house. One of those is on my route between home and work. Now, I'm not a big fan
of Blockbuster; I'm tired of their misleading advertising (the "three moons" campaign, the so-called "end of late fees"). I've been a Netfixer for years and really like it.
However, if Blockbuster matches that and allows cheap/included rentals from the brick-and-mortar stores, then that seems like an advantage over a mail-only service.