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. "
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.
Infinite rentals, no due dates, a massive library, and you can rent from your very own chair without ever leaving your house. What's blockbuster got to top that?
I would like to use an online rental service like Netflix (more specifically, their Canadian equiv. zip.ca) instead of Blockbuster, but I don't want to be locked in with their subscription model.
If they would introduce some kind of pay-as-you-go scheme, that would be ideal. I don't want to pay the monthly fee as in any given month I may only rent one movie -- or none at all.
boxlight
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?
Hot chicks at the counter?
Send email from the afterlife! Write your e-will at Dead Man's Switch.
I want both of them to keep fighting it out... for a very long time.
Because when video rental services compete, I win.
Three cheers for competition!
"All great wisdom is contained in .signature files"
http://www.redbox.com/ They have some they everone else doesn't... Cheap pay as you go rentals. And you can get fries with that!
I got fed up with turn around time with netflix and went with blockbuster. A month later I'm now back with netflix. Blockbuster will not send you a new release until it has been released for 90 days. Netflix will have the movie on your doorstep release day. After renting virtually limitless movies for a year New Releases are all I have to look forward to. Blockbuster not shipping new releases to force store visits completely contradicts what people are looking for.
Until blockbuster can realize that they need to stop putting all their weight behind their stores, netflix will always be the superior choice.
I found eDonkey significantly outperforms Netflix, at least for me.
I was once a subscriber, but I dropped Netflix back when they went from $19.99 to $23.99/mo.
they are just a pain in the ass. they come as e-mail links, you visit the web page, print it out, pick it up from the printer, then have to remember to bring the coupon when you go to the store. in the several months that i was a blockbuster online dvd rental subscriber, i didn't use a single in-store rental voucher. if, on the other hand, they had simply tied the coupons to my blockbuster account, i would have used them. and perhaps remained a customer. but as it was, the value-add just wasn't there.
MORTAR COMBAT!
"Since the launch of Blockbuster's online dvd rental program in August 2004, they have added 1.3 million customers, but over the last 6 months alone, Netflix was able to add almost as many subscribers. Each customer that Netflix acquired represents pure growth for the company, but of Blockbuster's 1.3 million subscribers, how many of them represent former retail store customers? "
The last few times I've been in my local Blockbuster, they have been doing hard sells on their online service to every customer. They talk about how convenient it is, how much it will save you, blah blah blah.
I seriously doubt Blockbuster has gotten very many new customers at all to their online service. I think most of them were conversions from in-store customers.
Comment forecast: Bits of genius surrounded by a sea of mediocrity.
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.
Man, you really need that seminar!
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.
For 2006 I've kept a log of my movie rentals to track turn-around-times. I recorded when a movie is sent, est. arrival, actual arrival and when I I recorded when I return the movie and how long until they log it received. 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. Not too bad, consider they're utilizing the postal service. (Which in my area is notoriously poor in performance. A letter mailed 2 hours away can take 4 days + to be delivered.)
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
Support your local library. Membership is free, and usually you can borrow all the latest movies and music at no cost. There are late fees, but nothing near what Blockbuster et al charges.
There is no reasonable defense against an idiot with an agenda
:wq
Not only does blockbuster online (the thing being compared with netflix) do everything netflix does, you also get coupons for various in-store promotions, as well as free in-store rentals included in the cost of your rental program. I get two free in-store rentals each month, which means if I decide on a whim that I want to see a certain flick, I can pick it up without paying any extra on top of my monthly subscription fee. I still have my 3-out-at-a-time movies to pick from as well. BB does everything netflix does, plus some.
Until this morning I was a Netflix user. I had cancelled this morning and subscribed with Blockbuster before reading this article. The problem with Netflix is getting 'new' movies. I am a medium level user with Netflix (I get a good amount but I'm not one of the more heavy users) but anytime I want something relatively new it is in "Long Wait" for weeks or even months.
Even if Blockbuster makes me wait a while for the newer movies then I can still get the one free in-store movie a week, as well as satisfy the impulse rentals that my wife and I want.
12 months later ... Nothing's changed. One person thinks their vision is still right. The other still thinks their's is right.
It's like watching a soap opera. I'll be sure to tune again another year from now to find out, yet again, that nothing has changed, except that one has fallen down an elevator shaft while experiencing menopause, and the other will have an illegimate child being held for ransom by their estranged spouse on an abondonded oil platform in the Atlantic Ocean.
I think Amazon will have the lead in a year or two. It has had good success in the UK and they are preparing to launch similar services in the US.
They have more than enough stock, and shipping centers. I think they can finally do online rentals right.
The longterm winner is the one that can first come to market with a downloadable delivery method.
It doesn't have to be super fast (you can choose your download in the morning and have it ready tonight), it doesn't have to be unlimited (people will pay $2-4 like they currently do), and it doesn't have to be open (most people don't care about DRM). It just has to be mostly reliable, current blockbuster hits, and very very easy to use.
Whoever that is (Netflix, Hollywood, Blockbuster, Comcast, or NewCompanyYetToBeNamed) will most certainly reign while the others scramble to catch up.
-David
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.
Oh my GOD! The ultimate in inconvenience!
you visit the web page,
Great Satan's Firey Balls! That must require the use of at least three muscles to move the pointer and click the link! Does Blockbuster offer health insurance?
print it out, pick it up from the printer,
Jesus Tap Danching Christ On A Cracker! Those foul villans! They make you trek all the way to the printer? Do they subsidize the required team of Sherpas and ruggedized GPS navigation equipment?
then have to remember to bring the coupon when you go to the store.
Wow! What does Blockbuster think? That we have highly evolved brains with complex memory capabilities? Those fools! Thos bloody, viscious fools!
I did an experiment: I had never tried either service before. I joined both Netflix and Blockbuster at the same time about two or three months ago, and rented from them as fast as I could (returning movies the next day most of the time). The first month, Netflix was a bit faster (I think it led 15 to 11 or something, I don't have my notes here). The second month and beyond, Blockbuster was significantly better (almost 2 to 1). Figure in the Blockbuster coupons (which I do use, since there is a convenient Blockbuster for me), and it looks like I'll drop Netflix soon and keep Blockbuster. YMMV *shrug*
"NetFlix throttling is well documented and even admitted to by NetFlix in their TOS."
BS. I just read their terms of service. It says nothing of the sort. It does say that it prioritizes lower volume customers, but that is something entirely different than "throttling".
"1. They lied about what day they received a DVD back from me (adding 1-2 days to the time it takes for the DVD to show up as being returned on their site)"
"3. They lied about what day they shipped a DVD back to me (for example, saying they shipped the DVD on Monday but actually shipped it on Tuesday or Wednesday)."
Speculation. There is no way short of you working at Netflix and doing the recieving yourself that you could know when recieved or shipped your movies. Given the HUGE number of extreamly heavy users of Netflix that report next day shipment to and from Netflix, it seems much more likely that your local post office is the culprit. A perfect example is me and my father. He lives 20 miles from me, and rents fewer movies. He keeps his movies usually about 2 days. I always send mine back the next day. I always have a one day shipping time, and he always has 2 day shipping times. So, what does he do? He whines about throttling. Really, if Netflix were throttling, wouldn't the person that gets MORE movies be the one that gets throttled? Your examples indicate that the throttling is a myth. They don't confirm it.
"2. They lied about the availability of new releases (I would see "Very Long Wait" while a new subscriber would see "Available Now" for the exact same DVD)"
This is in the TOS. They give priority to lower volume members. They have to give priority to SOMEONE. It seems to me that if you are getting 10 movies that you want to watch a month, and another guy just has one, the other guy should get the one he wants. There are other just as fair ways of prioritizing, but the one they chose is perfectly fair. Combine that with IT IS NOT THROTTLING. Throttling means that you are slowing down, in this case, shipments. If they are still sending you movies they are not throttling.
So basically you helped convince me that the throttling is a myth, and that people that live in poor quality postal areas are misdirecting their wrath.