Man, Blockbuster Online is Doomed. You know, one of the harsh lessons I learned about life at a young age is that sometime you can do everything right… and still lose. Remember that episode of Star Trek The Next Generation where Data plays Kolrami in a game of Strategema and loses? Yeah… you can indeed do things right, and still not get the results you want. Such is the lesson that Blockbuster is learning right now.
Over the last year, Blockbuster Online has been making some brilliant moves in order to compete with Netflix. The policy of being able to return your mailed DVDs right to the store and getting free in-store rentals for doing it was GENUIS! However, even though they did things right… they’ve been losing the fight, and more importantly losing money. And today it looks like they’ve put the nail in their own coffin by announcing price increases of up to 40%.
Yahoo News gives us this:
The movie-rental giant began notifying customers of the increases — and some price cuts — early Thursday. The hikes of $2 to $10 will take effect next week and caused an immediate buzz on Internet boards. The immediate beneficiary of the move was rival Netflix Inc. — its shares jumped more than 9 percent. Blockbuster shares barely budged.
Blockbuster lost half a million online customers in the July-September quarter. Chief Executive James W. Keyes said last month that many of those subscribers were costing his company more than they were worth. The company spent heavily to advertise the online service, and it lost money when customers took their movies back to stores for free exchanges. While Blockbuster was losing online customers over the summer — and said it would stop reporting the number of subscribers — Netflix cut prices and added 286,000 subscribers, pushing it over the 7-million mark.
Even though it’s premature, I’m going to call this fight over. I’m not a business major, but even I know that raising prices by 40% while adding no additional value for the money, is NOT a good way to attract more customers. Blockbuster online is in a death spiral. It is a shame, because no matter how good Netflix is, competition is always good for the market and it forced Netflix to STAY good and improve. It will be interesting to see how Nexflix evolves once Blockbuster Online goes under (which will happen eventually).
A direct solicitation risks exposure and may not be the best approach if you are concerned with confidentiality. Interview only with an authority able to offer you a construction job.
I am totally unhappy right now with BBO. I was pissed when they raised prices a couple of months ago and I stayed on and upgraded to a higher priced plan to continue getting unlimited in store exchanges. Today I cancelled. I refuse to pay $34.99 for that service. I think netflix will work better at half the price I can give up in store exchanges(although I really liked that part)
I’ve been a subscriber to Netflix for a long time and would never go to Blockbuster. What Netflix needs to do to stay ahead though is 1. make the instant view available on the mac, 2. Increase the number of newer movies they have in stock. As their members grow, I’m finding that the new releases are on longer and longer waits. It’s near impossible to get HD movies because they are always on long wait.
I’m an assistant store manager at a Blockbuster here in Kansas. I’ll be first to say that I even tell customers to cancel their plan because it’s just ridiculous and unfair to them that they’ve raised prices twice in about a six months span. I experienced the problems from the Total Access as a customer and as an employee. To be completely honest, we don’t even push it on customers at the store. We haven’t since about August. We try to convince customers now to cancel their plan and get the Rewards program or the Movie Pass which is in store (more expensive.. well not really now, but a better deal). Having said all that, please don’t be hateful to the employees in-store, the stores have nothing to do with the Total Access other than the name Blockbuster and putting up with their bullshit as well.
I agree with James. And the in-store exchange isn’t much of a factor to me when, (a.) the 3-month plan at NetFlix is 17.99 a month plus 17 hours of downloadable movies. AND (b.) EVEN A 4-movie deal costs less at NetFlix, 23.99. IT’S A NO-BRAINER.
Hey Matt, ummm…good luck with that “business major”.
I major is reality, and from where I sit in the arena, Blockbuster is down on the canvas, bleeding, and passed out….while Netflix is taking a victory lap around the ring and handing out a phone number to the card girl.
I’m a BB subscriber and they sent me an email this week it would go up by $2. Not enough to make me switch to Netflix. But I’m just one man.
Also, I am a business major and I would say we’re in the 5th round of a 12 round cruiser weight fight. Netflix landed a blow and BB has a huge gash over their right eye. If they can close it up and land a couple of blows of there own they’ve got a chance.
I disagree, I drive to and from the store all the time to get exchanges in store.
By going to the store you get at least double the amount you would normally get via mail.
The policy of being able to return your mailed DVDs right to the store and getting free in-store rentals for doing it was GENUIS(hilarious typo!)!
Uhhh, except that it wasn’t. Who wants to spend time and burn gas driving to and from the store? Kinda defeats the whole convenience of home delivery.
Having used both services, I can say that it was just never really that close. Blockbuster had slower delivery times, crappy selection, and ridiculous “incentives” that ended up costing the customer even more money in the long run.
When I read this on Reuters I couldn’t believe it. It is the SECOND increase this year. I sent an email to them trying to validate it , then saw in my email box a lovely worded letter about holidays, giving, and-oh yeah – you’re getting jacked from 21 to 34 bucks. I cancelled immediately and signed up with Netflix.
It’s unfortunate that the CFO and CEO didn’t do their homework and have all but decimated their margins on rentals. This however is not my problem.
I believe that should grandfather the subscribers, the ones who are in already, should stay at their existing rate and new customers can come in at the higher rate.
They are complete morons.
Yeah, I have the Premium Membership which allows for unlimited in-store exchanges with 3 out at time…it’s going from 24.99 to 34.99 at the end of the month.
I’m half-tempted to drop it and go with Netflix but I still like the idea of taking my stuff into the store and getting stuff immediately for free. I’m NOT happy with the price increase but I can understand it.
The thing that sucks is I JUST signed up for BBO this month and they pull this. But like I said…I like having movies in my hands at ALL times, unlike with Netflix.
The reason they were losing online customers is that it probably took too long to get their movies in the mail – a friend of mine said he had BBO and dropped them because of this fact. So far I’ve had good luck with my movies arriving on time/decent time, but…*shrug*
Another reason why they might lose customers is because their website sucks. I have a FULL queue right now (about 985 movies) and I can’t manage or see my queue. They said their tech. support was working on it but nothing has happened so far (this was weeks ago).
I will say their customer service department is OUTSTANDING…I’ve heard nothing but complaints about Netflix’s customer service…I have no problem getting in touch with Blockbuster and they’re quick with the emails when I have a problem and very helpful.
So we’ll see what happens in the near future with them.