Netflix vs. Blockbuster Revisited

Thomas Hawk writes "Exactly one year ago at thomashawk.com Davis Freeberg debated Wall Street analyst Michael Pachter regarding the future of the online DVD rental world. Freeberg maintained that Netflix was the clear and obvious choice for a winner while Pachter predicted that in the next 12 months Netflix would significantly underperform Blockbuster. Now another look one year later at the competitive landscape in the DVD market. Pachter is nice enough to continue the conversation and even admits in hindsight that he made a mistake regarding his prediction on Netflix vs. Blockbuster for the year past -- but Pachter still maintains that Blockbuster has the upper hand over Netflix in the coming year ahead. Freeberg, of course, thinks he's wrong once again and that Netflix will continue to dominate as the leader of this market. "

Comments

I want what comes next

[BenEnglishAtHome]

The biggest problem with Netflix is time. Like most folks, I figured to sign up, watch movies quickly, and really get my moneys worth. It doesn't work out that way. Just because "Teenage Exorcist" is waiting in my mailbox when I get home doesn't mean that I'm going to feel like watching it tonite. Recently, I've gone through nearly three busy weeks when I haven't had time and haven't been in the mood to watch a movie. At that point, my subscription isn't very cost-effective.

I'll keep subscribing for now, but I may just be one more watching-mood-drought away from cancellation. What would really keep me as a customer is someone who could offer high quality and fast downloads for a buck or two. Then I could buy on a whim and get exactly what I'm in the mood for instead of picking from among the three Netflix envelopes on the kitchen table that just happened to be fairly close to the top of my queue but aren't *precisely* what I want tonite.

Re:I want what comes next

[grogdamighty]

I've experienced similar periods where the DVDs you have just don't seem appealing and you don't really have the time... and suddenly you've had them for two weeks. Couple this with the throttling that Netflix does (I mail two DVDs back and mysteriously there's a 4 day difference between when they receive them?), and I'm considering quitting as well. The main problem is that I chose Netflix as a cable-replacement option: pay 1/3 as much as cable so my wife and I can get watch seasons of great TV shows or good movies rather than whatever crap is on at the time. If I can't get what I want when I want it, there's really no point to keeping it.

Here's hoping for a well-thought out download system.

Re:I want what comes next

[LordKronos]

That's what I've been doing when I don't have time to watch it right away (except I rip them to my mythbox...no need to burn anything).

The problem I'm having is that I'm unprofitable for Netflix, so rather than just canning me outright, they are doing their best to slow me down. After the first couple months of 8 movies per month, many of my returns started taking 2 days to get back to them (the return center is very local, so they have to be sitting on it for a day). That slows my down to under 2 per week. I kept that rate up for a couple more months, and occasionally got 2 a week by mailing back the same day I received it (or when my return actually got processed next day). Now the latest trick is 3 of the last 4 movies have been being shipped from across the country. Thats never happened before, and these aren't old/rare movies, nor are they movies in high demand. They are couple of year old movies that had their run. I never had any problems before with movies being shipped across the country, so it seems more than coincidence.

Anyway, those 2 acts have my rental rate just over 1 per week. That doesn't make it very worthwhile to use Netflix. On top of that, they've been shoving me to the back of the queue for new movies. I added King Kong to my queue the week before it was released. The morning of release, I checked my queue and it said short wait. Later that day it changed to long wait. The next morning it was now a VERY long wait. It's been 4 or 5 weeks now since King King came out, and I'm still at a long wait.

Anyway, my Netflix subscription is just about renew, so I'm planning on cancelling and switching to blockbuster. Well see how they are, but the one real advantage I see there is that they give you coupons for 2 free store rentals per month. That means even if they do the same sort of profiling of high use customers, I can still run out and get the movie from the local Blockbuster in a timely manner.

Re:I want what comes next

[geoffspear]

Right. The distribution centers with the same ZIP code (in my city) they had when I was in the one month trial period suddenly moved across the country (without changing that ZIP code) once I was a paying customer.

I suspect you think I'll believe the USPS would allow them to move and keep their ZIP code in the same way you'll expect me to believe that the postal service suddenly got very inefficient at delivering mail across town in that same time period.

Oddly enough, my mortgage payments get across town just as quickly as they did before, but I'm sure the slightly wider DVD envelope is being delayed by a brand new mail sorting technology the USPS just installed, coincidentally right after my trial period ended, in my area.

On the other hand, while Blockbuster was quicker in sending new movies, we cancelled when it became obvious that they were incapable of sending the DVD at the top of our queue, listed as "Now Available", instead sending the next DVD in the same TV series which was listed after it. If you want to watch the episodes in order, that's pretty annoying. Especially if you keep the out of order DVD and hope to get the correct one when you return another movie. Such faith in their system would be really naive. You're likely to get the next one after the one you're holding, with the one you want to see still sitting atop your queue.

I think the whole industry is a giant conspiracy to get people going back to the bricks and mortar rental locations so they can afford their rent.

Re:I want what comes next

[stefanlasiewski]

Did you notice Throttling for popular movies or extremely rare movies-- where popularity exceeds the supply? From my experience, these delays are very rare.

Often we'll return 3 movies at the same time, and will receive 3 new movies in the mail 2 days later, all at the same time. We live in Berkeley, CA and are only a few hours from the primary distribution centers or the NetFlix headquarters.

Re:I want what comes next

[Paul Slocum]

I cancelled cable ($44/mo) and am signing up with Netflix 3-at-a-time ($18/mo) which has almost all the shows I like to watch on cable and broadcast TV, and many that I want to watch but didn't get because they were on premium channels. And it elimates what I previously spent renting movies ($10-$15/mo).

Only disadvantage is that I can't watch the most current stuff, but I don't care. There's enough older stuff out on DVD to keep me occupied for years.

Re:I want what comes next

[rho]

I don't do that. They come in, we watch 'em when we have time. They go back out. Some months we watch 3 movies a week--some months, just 3 movies total. At $20/month, it's a good deal for me for these reasons:

1) If I hear about a movie I might want to see, or if somebody recommends something I haven't seen, I put the movie in the queue. No fuss trying to remember anything.

2) We don't have cable, so this is the majority of our entertainment budget.

3) With no late fees, we have total control of when we want to watch something.

4) Practically endless choices. I've never gone looking for a movie that I couldn't find.

If you're going to rip the DVDs as soon as they arrive, why not just download them from torrents? It's just a legal (or illegal, rather), and you don't have to worry about shelling out that MASSIVE $19.95 every month and making sure that you somehow game the system so your Netflix rentals work out to be $0.25/movie like a penniless schlub.

How I look at it.

[apparently]

With Blockbuster, my membership gets me 4 "free" in-store rentals a month for my $17.99 Blockbuster Online membership. So basically, the service is letting me make 4 rentals for $4.50 each (which is about the norm anywhere), and then in additional, I get "unlimited" Blockbuster Online rentals. As Blockbuster figures out how to further utilize their brick-and-mortar stores, I wonder how NetFlix will be able to compete against this?

Re:How I look at it.

[Moofie]

Um, Netflix sure didn't satisfy me. Their stealth throttling policy lost them my business many years ago, before they acknowledged that they throttle their service.

Had they simply been up-front about it, there would have been no issue. However, a queue of 40+ movies, all on "delayed availability", with nothing shipping to me, told me they didn't want my money anymore.

Re:How I look at it.

[PortHaven]

I received a $10 gift card to Blockbuster. It took me over an hour find two movies. Essentially, every movie I wanted to see was out of stock. In the end, I didn't rent anything. Rather, I bought two used movies "I Robot" and I forget what else.

So, I don't think I'd find those in store rentals of much use. Sure, there may be a film that me and a bunch of friends might want to watch right this moment...and be willing to run out to the rental store to get it. But I'd wager all the copies of said film will be rented out. At least that last few times I went to Blockbuster that was always the case.

At least with Netflix I have a steady flow. I also get to watch a lot of TV shows I miss. I've got the 5 disc program and seldom do I not have something to watch. With 5 discs it's pretty good. Just make sure you mix you queue up so you always have something lighthearted, something action and something dramatic. Plus your series filler (currently ST:DS9 for me) *lol*

the next progression

[LunaticTippy]

I used to use your primitive method. Now I skip the step of burning a dvd. I got a $15 tv-out graphics card, ran 50 foot composite/audio cables to my tv.

It looks good, I save time burning discs, and I don't have any more inexplicably ruined dvd-rw blanks. I don't know why it was happening, but I had about a 5% failure rate with each reuse.

Now I can show .avi or whatever on my tv without the SLOW process of converting to dvd compliant format, or watch visualizations with music, or change channels to see if my download is done, etc.

Re:the next progression

[drinkypoo]

I used to use your primitive method. Then I got an Xbox, and put XBMC on it. Voila! Great output (for SD anyway, which is all I have) and the convenience of being able to load content over the network, which means my TV and PC don't have to be close together. XBMC can even play VOBs over the network - not sure if it will play a VOB/IFO directory as a DVD with menus and all, but it plays DVDs off the drive just fine with the full feature set, so maybe. XBMC can play anything mplayer can play, provided you have the latest set of codecs.

Blockbuster and Netflix each have their own issues

[hal2814]

Have you been to a Blockbuster lately? Buying DVDs has gotten pretty cheap while renting movies has only gotten more expensive. The $4.50 per rental they charge is about 1/3 to 1/4 the price it would cost to buy the movie outright. And game rentals are now in the neighborhood of $7 per game! That's just crazy when the used video game market is rapidly devaluing games. Most of Blockbuster's gaming library can be bought for $20 or less. Why spend $7 just to rent it for a week?

Then there's Netflix where I can't just go pick up any movie I want. I have to request it and have it shipped. And that only happens after they get back one of the earlier movies I rented from them. That's a minimum two day turnaround. And while it is nice that you can request Netflix movies from the comfort of your own home, the less scrupulous out there have discovered that you can download just about any movie you want in far less time than it would take Netflix to get it to your door. And on top of that, their "unlimited" rental model leaves a lot to be desired for those who don't rent very often. Their cheaper packages offer little enough that they're not a good deal.

They are both toast in the long run - here's why:

[zerofoo]

On-demand movies are here to stay - they are more convenient than rentals, and as the selection gets better, a nice way to watch older movies that your local video store may not stock. Hard drive space is cheap, and soon it will be possible for cable companies to warehouse thousands of titles that you can watch whenever you want.

Content providers aren't too thrilled with this setup since the carriers (cable companies) get a cut of every viewing.....but it is a deal with the devil they must make - why you ask?

Piracy. Physical media is bad for the war on piracy. Everyone I know makes copies of their Blockbuster and Netflix rentals. Shipping physical media around the world is no way to control the duplication of that content.

The RIAA and the MPAA want to make this an on-demand world - one where you don't possess physical media. You consume the content streamed to you in a protected, DRM'ed out the wazoo, format.

The final nail in the coffin for physical media will be wireless - once wireless speeds are up to the challenge, you'll be able to stream music and movies to your portable devices and the car. It will only be a matter of time before the "lazy" media-consuming public stops collecting physical media and streams everything.

Then the issue of piracy via "media copying" almost completely goes away. Sure it might take 10 years, but it will happen. The hardcore guys will still figure out a way to capture the streams, but if the streaming world is easy enough, available enough, and cheap enough, most people won't bother.

-ted

Selection

[szrachen]

In my experience, Netflix has had a much larger selection of titles as well as a greater number of obscure titles. I don't recall what movie I was trying to get from Blockbuster but it was seemingly impossible to get it because of its obscurity. On Netflix, I got it right away. I also recall that Netflix has a lot more of the Season sets for Television shows.

Re:My shipping history...

[HarvardAce]

It's about a 1.3 days on avg to receive a movie and 2.2 days on average for Netflix to record it received. A total turn-around time of 3.5 days per film.

I have Blockbuster Online in Southwestern Connecticut, and the distribution center is within the same city. In all but one case (out of about 30 movies so far) I've gotten the movie the next postal day after the day they ship it. I've never had Blockbuster take more than one day to acknowledge receipt of a movie I mailed back, and on several occasions they have even received the movie the same day I mailed it. Additionally, they have always mailed me a new movie the same day they received the last one. I usually watch a movie at night, mail it the next morning, and a new movie will be waiting for me when I get back from work two days later. The lag for me comes from the rate I watch movies, it's definitely not from their side.