Netflix Sticks It To Blockbuster, Cuts Prices Again

The consumer-friendly price war between Netflix and Blockbuster rages on this week as Netflix cuts the price of its two most popular subscription plans by $1. The cost of Netflix’s 3-DVD plan will drop to $16.99, while the 1-DVD plan will fall to $8.99. The price drops will make Netflix plans $1 cheaper than comparable Blockbuster plans featuring Total Access. Both retailers slashed the price of their 2-DVD options last month to $13.99. The latest move from Netflix is meant to drain much-needed cash from Blockbuster. From the Chicago Tribune:

Stepping up its attack on Netflix also has been hurting Blockbuster, which has had to spend more heavily on DVDs to ensure sure its stores have enough discs to keep up with the additional demand from its roughly 3 million online subscribers. The company lost $49 million in the first quarter.

Blockbuster may not be willing to endure those kinds of losses much longer, especially with the recent hiring of a new CEO, James Keyes. In a Securities and Exchange Commission filing last month, Blockbuster said it will modify its online service “to strike the appropriate balance between continued subscriber growth and enhanced profitability.”

This rabid price war is exactly how the free market should work. If only the telecommunications sector fought this way…

Netflix to lower online DVD rental fees in battle with Blockbuster [Chicago Tribune]
PREVIOUSLY: Netflix Lowers Costs As Blockbuster Prepares To Raise Prices
(Photo: Pascal Vuylsteker)

Comments

Edit Your Comment

  1. formergr says:

    Too bad their whole site was down from yesterday evening to about 4 pm EST today as a result (its suspected) of a something that happened while they were updating it to reflect the new prices.
    [www.fool.com]

    Oops!

  2. Squeezer99 says:

    the fuck? blockbuster’s 3-dvd at a time plan already is 16.99 and has been that way for a while now.

    [www.blockbuster.com]

  3. Smashville says:

    How are they “sticking it” to a company by having a higher price than
    the other company? Blockbuster’s 3 DVD plan is already $16.99.

    [www.blockbusteronline.com]

  4. benchman says:

    Now if only the cellphone, broadband, and cable companies could be just as competitive…

  5. HungryGrrl says:

    nifty. I was thinking of upgrading to the two-dvd plan when they lowered the price but never got around to it, I’m glad I can enjoy a discount without changing plans.

    But on the other hand…

    I wonder if they’re still enforcing the “if we can’t make $2 a movie off you we won’t send you any more movies this month” unofficial policy… if so, Netflix subscribers will simply be getting one less movie per month, no matter how promptly they watch and return their movies.

  6. Christopher says:

    This is great. I started using Netflix about five months ago, and I was considering canceling until two months ago when they finally added local one-day shipping facility near me.

    I’ll never use Blockbuster again after they sent me to collections over an unpaid $5 late fee. Yes, you read that right, they sent me to COLLECTIONS over 5 bucks!

    I’m glad that I chose Netflix (despite what squeezer99 and smashvillle say), and it was worth the $17.99/mo, but I’m glad that I’m still getting the lower rate.

    Now if they would just get “Watch Now” working for Macs……

  7. SaveMeJeebus says:

    Our Blockbuster doesn’t waste any time sending you stuff in the mail if you have late fees; it is almost insulting since it takes them less than a week to do so and I have been a customer for years. However, I do the Total Access and I am pleased with it because they scan the movies and credit your Queue every night and they are about 2 miles down the road from me. All in all, we have the two-at-a-time plan on a “please don’t cancel” year long promo and we are never without movies for more than 24hrs.

  8. G-Dog says:

    My family did Netflix for a year and a half. Six months ago it got to the point where 8 out of 10 DVD’s were so scratched they wouldn’t play. We switched to Blockbuster and haven’t had a bad one yet. I assume it’s simply a case of more people cycling Netflix than Blockbuster DVD’s

  9. mcrbpc says:

    @G-DOG
    weird–I’ve been using Netflix for over a year and have never had a problem with unplayable discs. I wonder if it varies by what distribution center you have to go through…

  10. Lyrai says:

    “I wonder if they’re still enforcing the “if we can’t make $2 a movie off you we won’t send you any more movies this month” unofficial policy…”
    Wait, what? First time I’ve ever heard of this. What is this, and should I be worried?

  11. gtr225 says:

    @benchman: Yea it seems they all secretly agree to raise prices at the same time so well all get screwed.

  12. gtr225 says:

    @CBragg: Yea and Linux PC’s too :-) For windows it’s an awesome feature, with a nice connection movies come in crystal clear, even with a slow isp the movies still look good. I think that defeats the whole “Blockbuster lets you return movies to the store” argument.

  13. gtr225 says:

    @Lyrai: I beleive he’s talking about throttling, check it out here [en.wikipedia.org]

  14. startertan says:

    I can’t stand Blockbuster’s online service. Maybe things have changed since I tried them when they first got up and running but in the 1 month that I had them I’ve had 3 wrong movies…of the same movie. I got the wrong movie, reported it, asked for the right one, they sent me a replacement, it was wrong, and went through the whole thing again. Netflix has sent me the wrong movie once and sent me the correct movie after reporting it.

  15. aikoto says:

    Blockbuster’s plan is superior because you can take the “mail” movies you’ve watched to the store and get movies right then and there to replace them. Netflix could be half the price and it still wouldn’t be worth it.

  16. busrider says:

    Sure they lowered their prices, but they’re also not offering as much service.

    For instance, the “Watch Now” feature (steaming movies) uses your monthly subscription fee to limit the number of movies you can watch per month. So previously when you paid $17.99/month you were alloted 18 hours of viewing per month. Now you only get 17 hours since they lowered the price to $16.99.

    Not a big deal in my opinion, but still a decrease in the service none the less.

  17. night_sky says:

    $16.99 for me is still too much. I’ve been with Netflix and Blockbuster, and frankly they both suck. Their turnaround times are awful. Netflix used to be great but they soon throttled the hell outta me. Eventually I just cancelled because why in the hell should I pay for service I’m not getting? Unlimited DVD’s my butt! Until I see a 3 DVD $10.99 plan, I ain’t signing up nowhere… unless one of them includes games in their rentals.

  18. jmackowi says:

    I’ve had Netflix for over 4 years now. I’m pretty happy with it. I have the 3 at a time plan, and I’ve never had an issue with not getting my movies on time. I’ve read about throttling, and I don’t have a huge issue with Netflix slowing their shipments down. If too many people do that, Netflix will not exist. I do still go to Blockbuster from time to time, and each time I go in there, I get a hard sell from someone they just have roaming the aisles. My reply is that I have Netflix and am happy. Then they try to sell me on Total Access. I always make the point that before Netflix, Blockbuster reamed all of their customers with late charges. The only reason they got rid of late charges was Netflix, so I am going to do my part to keep Netflix profitable. The last thing anyone wants is to keep a DVD for 3 extra days and end up with a $12 late fee like the Blockbuster of old.

  19. elf6c says:

    Video on demand from cable, Direct TV, Dish and through Xbox Live and whatever they are calling the PS3 knockoff version (Home maybe?) is going to kill them both off in three years. Mark my words. If you own their stock– sell now.

  20. Trai_Dep says:

    I think of the two, Netflix is better, the selection more quirky, the web front-end richer, and it’s nice to see them sticking it to The Man.

    That said, I quit over their throttling. And their abysmal customer service (avail only thru email, ‘natch). I wouldn’t mind if they throttled new titles for customers savvy enough to minimize discs collecting dust. That’s reasonable. But just choking back on mailing ANY discs? That’s messed up. Everyone agrees – that’s why they lost the lawsuit.

  21. lilyHaze says:

    I got throttled too when I was with Netflix for about 6 months. I was watching at least 2-3 discs per week (back when I didn’t have TV). Toward the end, it took them 2-3 days to mail a disc (versus the 1-2 days before). I quit when I moved and got cable.

    I still prefer Netflix because they offer a more diverse selection [like independents].

  22. Little Miss Moneybags says:

    I have Blockbuster’s one-at-a-time, two-per-month plan for $6.49/month and it’s great. I can take the mail-in disks back to the store plus I get an online coupon, so it’s five rentals for the price–and honestly, I have a hard time managing to rent and watch five movies per month. I couldn’t see paying for anything more than that.

  23. TheZenArcher says:

    While Netflix still leads with superior selections and a likely more cinephile userbase, I’ve decided I will never give them my business again as long as the “throttling” policy is in effect. They’re essentially saying you can’t get your money’s worth out of them, but it’s a great deal anyway — right. Why maintain the fiction of “unlimited DVD” pricing? Why not just switch to per-disc fees and let viewers get the services they choose to pay for? Also, the Blockbuster website has vastly improved over the past few months and the physical integrity of the DVDs is significantly better than Netflix stock. So unless BB becomes insanely overpriced, in which case I’ll use the kiosks in the grocery store or, better yet, the library which is free — after taxes ;-) — I’ll stick with BB as a satisfied customer. Indeed, if anyone from BB reads this, here’s whatcha do: if you must raise prices, offer alt versions of Total Access: one where in-store exchanges can be made for any DVD/game title (current system, new price) and one where in-store exchanges cannot be made for New Releases (new system, current price). Everybody’s happy with choices. Let me know where to send the consultancy bill.

  24. ediebeale says:

    I’ve had a few problems, but mostly I love me some Netflix; they took my post office to TASK when I wasn’t getting some movies, and as a result, my entire mail service has improved. Also, this might not matter to some people, but Blockbuster has a “watch list” of “unacceptable” movies that they will not rent (movies like Todd Solondz’s Happiness, etc.) They also cut bits from their rentals, or only rent “clean” versions. I’d rather pay an extra buck or two and get what I want.

  25. kJeff says:

    I’ve been a Netflix user since ’99 (4 DVDs/month). I’ve gone through periods of high usage (15+/month) and low usage (1-2/month). I’ve never been throttled or had more than an expected amount of broken/scratched discs.

    Also, mostly because I’m a glutton for punishment (and also part of a lucky promo program) I also am a Blockbuster member (1 DVD/month). It is worthy to note that I’ve been a member of Blockbuster for a much shorter time and have received more broken/scratched DVDs from them than I ever have from Netflix.

    In comparing the two, Netflix has way better service (I can mail a DVD back on Monday and have my next one on Wednesday, vs Blockbuster where my next DVD doesn’t arrive until Friday) and a much bigger selection.

    The great thing is that because I’ve been a member for so long, I get the 4 DVD/month plan for the same price that everyone else pays for 3/month.

  26. Timewalker says:

    @ediebeale: Can you point us to some documentation of this? Someone who has compared a BB version of a disc to a retail or Netflix version. It’s not that I don’t believe you. I actually think I’ve seen this (both from BB and from Hasting’s in the past) but I could never find proof.

  27. mikep345 says:

    @HUNGRYGRRL: They are continuing that policy, sort of. My fiancee and I just quit Netflix when our rentals began to take an entire week to get to us (thing is, the Netflix distribution center is about a mile away from us). We’re either going to Blockbuster or re-registering under my name to return to the level of service we once enjoyed under her account.

  28. Trai_Dep says:

    The thing that’s so tragic about Netflix throttling their best (from word-of-mouth perspective) customers is that they have a really great front-end that makes creating a title list a breeze. And fun. And these same customers are the ones that are happy to get those kewl, quirky, low-demand titles as much as the hyped, most recent releases. I totally would have stayed w/ Netflix had they figured, “less high-demand titles that we have to share revenue on.” It’s reasonable.

    But they didn’t. Then they lied about it. Then they had to get sued to admit it was going on. Then blames us because we dropped our discs in the mail more efficiently than the schmoes. Then when they lost the case, they simply modified the user agreement retroactively so that they could continue to penalize their best customers (again from a marketing standpoint).

    All so they could save a couple extra 1st Class Mail stamps a month. STOOPID!

  29. ediebeale says:

    TIMEWALKER: There’s tons of anecdotal evidence (some of it from some crazysounding people, but you gotta take the wheat with the chaff) if you do a “Blockbuster Censorship” google search. I also have anecdotal evidence from a lot of people, including myself. I got a copy of The War Zone from Blockbuster–a few years back, but it was a DVD–and I’d seen the movie before, so I knew scenes had been cut out; I’ve also seen the Netflix version, which is the proper theatrical release. They did the same thing to, I swear to God, Eyes Wide Shut. They rent copies which blur out some of the orgy scenes, at least they did four or five years ago. Crappy movie, but still…

    I have also seen them take out their watch list when I was in college and I was with friends trying to take out movies for film classes and whatnot. They wouldn’t rent The Piano Teacher, if I recall correctly.

    I’m not sure if they actually recut movies themselves or refuse to buy anything but precleaned versions from distributors. Either way, not my cup of tea. I’m an adult, I’ll decide if a movie is too dirty/violent, etc.

    Sorry, this is a novel, ain’t it?

  30. gtr225 says:

    @jeremyduffy: The whole reason I have Netflix is so I don’t have to go to the dreaded video store. What good is returning the movie in the store when all they have is a big wall of 50 copies of the same shitty new release?

    @busrider: Yea you lose an hour but 16 hours still comes out to about (assuming 2 hours per movie) 8 movies a month.

    @jmackowi: One of the reasons I stick with Netflix is that if it wasn’t for them coming up with online DVD rentals, we’d all still be stuck with Blockbusters late fee’s and poor selection. The only reason they copied Netflix was because they lost a lot of customers.

    @elf6c: VOD is still missing one thing, my movies! With Netflix and Blockbuster you get to choose what YOU want to see, not what THEY want you to watch. Hence the reason I don’t use Dish Network On Demand nor do I subscribe to the premium channels, all the ppv movies, TV series DVDs, and premium channel movies I can watch on Netflix.

    @trai_dep: I got throttled before too cause I was sending back my DVD’s the same day I was getting them. But they’ve eased up on it after a week or two.

    @ediebeale: Many years I ago I went to a BB looking for the movie Kids and I was informed they don’t carry that.

  31. Mary says:

    @jeremyduffy: Actually, I absolutely hate the idea of traveling to a video store for any reason. Which is WHY got Netflix in the first place, because I didn’t want to go to the video store, no matter how close it was. I wanted to come home and watch the movie.

    I’ve been a Netflix member since 2001. I’ve gotten the wrong disc one time, I’ve gotten a scratched and unplayable disc twice I think…

    Most of the discs I’ve gotten that skipped a little worked just fine after a quick cleaning.

    I’ve never, in my six YEARS as a member seen any evidence of being throttled. I don’t use Netflix to rent new releases, I use Redbox ([www.redbox.com]) for that. Redbox is $1 a night, you return it to your grocery store instead of a separate location. So I pick up groceries and a new movie, then the next night I drop off the movie and grab some fresh food for dinner, all on my way home from work. For $1.

    Netflix is great for year-old movies, television shows, foreign movies, documentaries, and anime, and that’s what I rent from them.

    Also, if nobody else has brought it up, there were massive power failures in a datacenter yesterday in I think San Francisco. Knocked out Vox and several other websites, so Netflix likely a similar situation, since it died around the same time and came back around the same time.

  32. sharki3232 says:

    I’ve only been with Netflicks for a few months but I’m already hooked. If I wasn’t addicted to Cartoon Network (Foster’r rules!) and didn’t have to bundle with high speed I’d ditch my cable in a second.

  33. kenposan says:

    I’ll add to the blockbuster hate. My local BB had horrible customer service so I quit going there. Netflix has been great and I haven’t set foot in BB for 7 years.

  34. gtr225 says:

    @meiran: It’s blatantly obvious when you get throttled because they email you telling you your DVD is coming from Florida or North Carolina, mind you I live in New York City and normally my DVD’s come from Flushing Queens..

  35. HungryGrrl says:

    @Lyrai:

    Google it. There’s only anecdotal evidence, but the term that people use is “throttling” I guess. I haven’t had any personal experience with it as I usually have my movies in house for 3 or 4 days and with transit times don’t get more than 4 or 5 a month anyways.

    I have been a Netflix member for about six months. I’ve gotten one wrong disc and one broken disc. From those experiences I’ve learned that even if you’re not planning on watching the movie that day, CHECK THE DISC AS SOON AS IT ARRIVES. If there’s a problem, put a sticky note on the disc envelope describing the problem and report it online and send it back. If you don’t put a physical note with the disc often the problem discs end up back in the system and might even get sent right back to you.

    To get the fastest return time, drop the envelopes off at the Post Office on your way to work, so they will get processed that day (and not the next morning if you drop them at a 5:00 PM mailbox.) My transit times are generally 1 day each way. I wish they’d start mailing on Saturdays!

  36. synergy says:

    I’ve been with Netflix for 2 or 3 years with the 5 DVDs at a time (we’re poor and movies are our only entertainment). We’ve gotten scratched DVDs now and then, but considering our volume annually, it’s a drop in the ocean. We also haven’t really experienced throttling, but then we also don’t return DVDs to the post office the same day they came in. I think we’ve done that only a few times. Most of the time, at best, we watch it overnight and mail it back the day after it arrived. I agree that they shouldn’t say unlimited, but expecting this business to be truly unlimited, I believe, is naive.

  37. Teapotfox says:

    @SaveMeJeebus: Your local Blockbuster doesn’t have the option of mailing you anything or even phoning you about fees… all notifications are automatically sent by phone and mail from off-site. The local store has absolutely nothing to do with it, and if you aren’t receiving notifications, it’s because your account information (phone or address) is outdated.

    @ediebeale: BBV does no editing themselves. I don’t know where these BBVs are that only rent ‘clean’ versions of movies… I can walk into any of my local stores and rent dozens of unrated versions of films that were rated in theatres. In fact, there are some titles for which they receive both the rated cinematic version and the unrated version, and that’s about it. And as for Solondz, the closest BBV to my home has both Palindromes and Happiness for rent. Oh, and The Piano Teacher, for that matter. There is an Independent section and a Foreign section, both with a very good selection.