Sorry, Blockbuster, It Doesn’t Sound Like You’re Rescuing Netflix Customers to Me

By  |  Friday, July 15, 2011 at 2:37 am

It isn’t easy being Blockbuster. When the company’s in the news, the news is usually lousy–like in September of last year, when the once-mighty video rental chain went bankrupt.

This, however, has been a good week for Blockbuster. Sort of. At least if you assume that a bad week for Netflix is automatically a good one for Blockbuster.

Blockbuster seems to think so. After Netflix ticked off customers by raising the cost of subscribing to plans that include both streaming and DVDs-by-mail, Blockbuster issued a press release which it titled “Blockbuster Rescues Furious Netflix Customers.” Oozing schadenfreude, it quoted Blockbuster’s president saying that Netflix’s price hikes were “shocking” and pointed out some advantages of Blockbuster over Netflix, including Blu-Ray rentals at no extra cost, the availability of game rentals, the ability to return discs to a brick-and-mortar Blockbuster location, and no 28-day delay before new titles arrive.

It also offered a special deal to defecting Netflix customers: a 30-day free trial of Blockbuster’s Total Access DVDs-by-mail service, and then a one-disc plan for $9.99 a month or a 2-disc plan for $14.99 a month.

It’s nice–or at least opportunistic–of Blockbuster to offer the price break. But the thing is, it’s unclear to me why switching would turn an unhappy Netflix customer into a happy Blockbuster one:

The special offer doesn’t save unhappy Netflix customers any dough. It doesn’t undercut Netflix’s pricing–it just matches it.

If you don’t have a Blu-Ray player, Netflix is cheaper than Blockbuster. You can get a DVD-only 1-disc plan for $7.99 a month, or a 2-disc plan for $11.99.

Without the special offer–which expires on September 15th–Blockbuster is more expensive than Netflix. It may be wringing its corporate hands over Netflix’s pricing, but it normally charges more than Netflix does–$16.99 a month, for instance, for something akin to what Netflix charges $14.99 for. (To give Blockbuster credit once again where credit is due, the extra $2 does get you some movies earlier than Netflix has them, plus game rentals and the ability to do business at a neighborhood Blockbuster location, assuming you still have one.)

Blockbuster doesn’t have anything that compares to Netflix Watch Instantly. Netflix actually lowered its prices for DVD-only customers: there’s now a $7.99 one-disc plan ($2 less than Blockbuster’s lowest offering). What it did was raise the price of getting DVDs and all-you-can watch streaming video. But Blockbuster has no unlimited video service, just rentals and purchases, and there’s no bundled plan that includes DVDs and on-demand. So part of being “rescued” by Blockbuster involves giving up one of Netflix’s principal attractions.

To recap: If you’re a Netflix customer who’s disgruntled because Netflix has raised the cost for folks who want both DVDs and unlimited streaming, being “rescued” by Blockbuster won’t save you money, and will require you to give up unlimited streaming. How many Netflix malcontents are going to go for that, once they’re done letting off a little steam?

 
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18 Comments For This Post

  1. Lala Says:

    I canceled my streaming-only plan with Netflix this week because of the way this was handled. I still won't go back to Blockbuster… 10 years ago they failed to behave themselves and that is precisely when I and many others threw our loyalty behind Netflix. We have basically advertised freely for Netflix by word of mouth ever since. The comments made by Netflix management are disgusting to customers who were part of Netflix's growth, and that is the reason some of us will do without entirely, or spend more time on similar services that may not offer better deals or selection. It is not about the money… had Netflix handled this better I would have stayed and even paid more because of my 10+ year loyalty and desire for them to succeed. That sentiment disappeared overnight for many of us. Friends of mine received a price DROP with the new changes, and they too are canceling their service because they are disturbed about the way this was handled. It is not about who has the better deal to me, at all. It is important that my monthly fee, whether $10, $20, or $30 go to a company that doesn't discard my loyalty. My business is available to the next company that creates something comparable… and if it needs a $50/month fee to get up to speed, I will be there to pay it if they treat me right.

  2. Lloyd Braun Says:

    "The comments made by Netflix management are disgusting"

    What comments were disgusting?

    Sounds like someone got their feelings hurt. :(

  3. @iancamera Says:

    I think there is a misprint in the second to last paragraph. Where it says "But Netflix has no unlimited video service" is it supposed to say Blockbuster? Otherwise, good point!

  4. AZMerf Says:

    It's hard to know what to do when you have millions of users and have such a huge market share. However, it seems like Netflix could have grandfathered in people, even for a period of time. I suspect their subscriber base is so large that it would not have been advantageous. I watch mostly streaming now anyway so I'll probably drop the 2 disk to 1 disk to keep my price point.

  5. Nathan Chase Says:

    I don't really understand why people are so up in arms about this. Everyone that I know who has Netflix with the DVD plan simply did it because it was next to nothing over the price of streaming alone. The discs just sit on a bookcase or in a drawer somewhere and collect dust. It has been obvious through the way Netflix have been marketing themselves that they are trying to move away from the discs because of the hassle and cost of everything that goes along with having to mail the discs. They were probably hoping that this bump in price was the nudge that got people off their seats to find those discs, send them back, and switch to streaming only.

  6. Kevin Says:

    @AZMerf – I think existing customers were grandfathered in for roughly 6 weeks (until September), right? Maybe they'd have been well to grandfather them through the end of the year though, so I see the point.

    I too don't see why everyone is so far up in arms. Even if you got screwed the most (being on the 1 disc plan so you get nailed with the 60% increase, it works out to $6….or roughly 20 cents a day. 60% sounds a lot worse than $6, I guess, so everyone is using it like it's some astronomical increase (which while it is percentage-wise, it's not dollar-wise).

    Or maybe $6 just isn't that much to me, considering I get hours and hours and hours worth of entertainment out of it…..unlike my other "not-so-fun" bills that have actually gone up more (gas, electricity, water, sewage, garbage collection, etc). I think people are less upset when their electric goes up $20 than the Netflix hike.

  7. Nathan Chase Says:

    My thoughts exactly! The people who were with Netflix from the beginning should take a second and remember the prices and plans from back then. When the streaming was introduced, it wasn't unlimited, it was expensive, and the selection was pretty laughable.

    Bottom line is, if you want Netflix to continue offering up a great selection of video AND continue (like they have) to aggressively add new content to the fold, then the pricing will have to periodically need to be adjusted. Especially since their contracts with the studios are about to end.

  8. Kevin Says:

    And I would rather have one big increase than several smaller ones. But that's my opinion. In a few days, it'll settle down (it already is), and I'm sure Netflix will be just fine. After all, they have more customers than Comcast (and if that company can hold onto customers, Netflix certainly can).

  9. Nathan Chase Says:

    And I would much rather pay $15 or $20 to Netflix and have an almost endless supply of great things to watch than spend $80 to Comcast and be constantly flipping channels trying to find something decent to watch.

    Where it gets complicated is Comcast is my ISP and I have been completely without cable television for almost 2 years. Comcast has recently set bandwidth caps for internet use. They also own several cable channels. What's to stop them from doing everything in their power from making Netflix's services run slower, lower the caps even more, or even block services like Netflix when they see that I am not dishing out the big bucks for their premium cable services?

    These are interesting times we live in. As these companies that offer conflicting services along with services that rely on other companies to be fair and honest they will resort to shady actions. Not necessarily illegal, but the Comcasts and Time Warners are going to do everything in their power to make Netflix as inconvenient as possible.

  10. MJPollard Says:

    What I think you guys are missing is that, in my opinion, it wasn’t WHAT Netflix did, it’s HOW they did it, in conjunction with their p*ss-poor attitude over the issue. Price increases on services are inevitable; we deal with them all the time. But if you act in a heavy-handed, “we can do what we like and there’s not a d*mn thing you can do about it” manner, you’re going to tick people off. And the timing couldn’t be worse, coming off the debacle of their website redesign that, to many people, was a turn for the worse. They didn’t handle that one very well, either.

  11. bouvier bernois Says:

    le bouvier bernois est absolument irrésistible. Mais il ne faut pas trop se fier à ses allures nounours

  12. Mike Thrane Says:

    Aren't people grandfathered in until September 1?

  13. Joseph Says:

    I am considering the switch to Blockbuster for my Blueray rentals, the priciing is the same except you get moves a month earlier , they have a larger Blueray selection and with also having a larget inventory that means less waiting once a film is available.

    Plus for those that have game stations they can also get games.

    Blockbuster does not have a streaming service that i would use but this means that I can reduce my Netflix bill from shy of $30- and now only pay them $8- per month or $96- per year and that is if Amazon Prime which has the same content as Netflix does not become my streaming provider.

  14. neil Says:

    so now that netflix has crush every mom and pop store and look's and feel above everyone knowing it was from the help of millions of people who have an account with them who thank's when someone say's i have something cheap then what you have would last forever this company did what they needed the do by putting people out of work and this company has now showed other company's if you wanna pocket millions of dollar's offer something cheap over the internet and by mail and you will shut down every local store and mall and in this store's are people who like you and i have the pay bills keep a roof over you and you kids head and food in they're mouth this company does not care cause if they did why don't you hear all hiring they're doing all you hear is how big this company is getting and all the money thats being made cause people love staying home and being lazy streaming all day so keep raving about have great is the stream and how cheap the price still is and that is the first of more the come

  15. dave Says:

    This is really about a price hike, with zero improvement to the plan. Netflix streaming has never been great. Typically old or foreign movies dominate the selection. Add to that the deals made with studio's to release new DVDs late, and you could argue that they are decreasing their services , and increasing prices. Not a good combination.

  16. Anthony Says:

    It's just amazing that Netflix didn't invest more in PR consultation. The method employed basically gave their customers REASON to LOOK for a better deal. It's hard to maintain customer loyalty when you basically say, "Yup, we're raising your bill! You've been getting a heck of a deal up until this point, now you're going to have to pay what you ought to for what you were (actually for less than you were) getting."

    It seems that Netflix wanted to send two messages with this tactic:
    1. Netflix is going to move to primarily a streaming service, and that's final.
    2. Netflix is supremely confident that they have a superior service at the lowest price, and will continue providing said superior service for the foreseeable future.

    Netflix basically called the world out and said, "come and get us!" while selling out their customer base in the same breath.

  17. Some Guy Says:

    >How many Netflix malcontents are going to go for that, once they’re done letting off a little steam?

    Well me for one. If I struggle I can get about 8 rentals per month form netflix. with BB I can get basically unlimited since I pass one 5 days per week. Plus games… no brainer.

  18. zahidpro Says:

    These are interesting times we live in. As these companies that offer conflicting services along with services that rely on other companies to be fair and honest they will resort to shady actions.
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