Netflix vs. Blockbuster

Today's announcement that Wal Mart is exiting the online rental business and
working with Netflix leaves those who rent DVDs with that big question, who
is better?

Two months ago I ran an experiment on my own. Already being a Blockbuster
subscriber, I signed up for a Netflix trial. For the sake of clarity the
Blockbuster subscription was a three at a time versus Netflix trial of two
at a time.

The questions this experiment sought to answer did not rely on the uneven
nature of the two plans. Tested were 1) turnaround time, 2) quality of
product shipped, 3) response of customer service. The test was limited to
two weeks although some of the results posted here was from some follow on
work.

Turnaround time

My location to both Blockbuster and Netflix post offices is about 15 miles.
Both companies have distribution is the same town. Therefore, one would
assume DVDs returned would arrive at about the same time. To test this
assumption two DVDs from both companies were taken to the Long Island
distribution center one evening before the last pickup. This removed any
delays caused by transfer from the local post office to the distribution
center since all mail goes through the distribution center. Results: Both
Netflix DVDs were logged in the next morning, Blockbuster logged in one with
the other taking another day to appear. Overall, even after the test
Netflix has a high level of returns arriving the day after being returned,
Blockbuster is unpredictable, at best.

For shipping the move "Meet the Parents" was chosen to be shipped by both
companies. They were logged as being shipped the same day but the Netflix
DVD arrived the next day, Blockbuster's the day after, yet, on time. Most
of the time Netflix DVDs arrived the next day a day ahead of the estimated
arrival date. Blockbuster has about a 50 percent next day. Knowing that
Netflix does not work weekends shipping and returns were done for the tests
on Tuesday. Generally, the post office is better equipped to handle mail in
the middle of the week.

Quality of Product Shipped

It was hoped that both companies would ship a damaged DVD and in the two
week window they both managed to meet that goal. The difference was in the
response. Blockbuster shipped the movie "Ray" damaged, a very popular
selection at the time. It was reported immediately. To this date almost
two months after the test the movie has not appeared. Netflix shipped 61*
damaged. It was reported immediately and the next day another DVD was on
the way.

An observation of the Blockbuster damaged DVD found a huge visible scratch
that almost any human eye could detect, yet, the DVD was shipped. Extremely
poor customer service. If nothing else, BLockbuster should have visually
examined the DVD and tested it before sending it out. The expense to
Blockbuster is small, to the customer getting ready to watch a DVD to find
it is damaged and then to have to wait as in this case forever to see the
movie is what leads to subscriber loss.

Netflix's DVD appear to have a reasonable surface with little, if any,
fingerprints or scratches. One recent damaged disc had what appeared to be
a manufacturing defect that required turing to the light to notice.

Response of Customer Service

This was hard to compare since Netflix handled without delay problems.
Blockbuster had trouble answering inquirers sent by the web site and in the
case of the damaged "Ray" stated they would be sending out a replacement.
That was tow months ago and it still has not arrived.

Which one?

Netflix is a few more dollars that Blockbuster when comparing the
three-at-a-time plan; however, judging by availability the cost is worth it.
Blockbuster's inventory in my queue has gone to either "Short Wait" or "Long
Wait" for most of the selections. You never know exactly what the next
movie might be because a movie list as "Available" may become unavailable
when you return a movie. Netflix seems to have more availability and that
is to be expected since it is online only rental and the inventory is much e
asier to manage and project.

A saving grace for Blockbuster is the two coupons for store rentals.
Although the clerks seem puzzled by the coupons. One store I went to rent a
movie with a coupon the clerk almost refused to rent to me since I did not
have account at that store. Now would someone who rents online necessarily
need or want an account at a physical store. The clerk wanted to know that
I had an account with Blockbuster, which I did, and called the store to
confirm. Mark that to poor customer service. The clerk should have access
to the customer's credit card information and confirm the rental from that.

What appears to be a problem for Blockbuster is each store carries a large
dollar inventory of movies that are not top rentals. My test was "Toy
Story." It went on my queue in March and has remained "Long Wait" for over
two months. Yet, the local store always has a copy on the shelf.

Lastly, online and in-store are separate businesses and nothing was more
apparent than a Carmen Electra exercise DVD. It sat in my queue for about
six weeks. During that period I used the "Check Your Local Store" option
and found it was available. Taking my rental coupon with the thought of
renting it to the local store, the clerk informed me they do not rent
exercise DVDs. When she asked if I wanted to purchase it, and, that the
price was $19.99. I presented a print out from the web site where the price
was $13.99 if purchased online.

My conclusion is Netflix has the better online service and that is their
only business. Blockbuster seeing the growth of Netflix responded with an
online store that has not been carefully thought out which seems to be
technique in Blockbuster's exective suite. Over the past months Blockbuster
introdcued "No Late Fees" which really was not entirely true since you
purchased the DVD after eight days overdue. Then the $9.99 one-at-a-time
store rental. Blockbuster is cast in the role of a follower and a very poor
follower, at best.

Blockbuster has a tremendous investment of in-store inventory.
Blockbuster's response of creating an online division reminds one of AOL
during its growth period. That is, Blockbuster counts subscriber growth as
evidence of success but ignores the fact they do not have sufficient
resources, in this case DVDs, to meet the demands of subscriber growth. But
for Blockbuster loss of in-store revenue to Netflix, Walmart and others
obviously represented a threat. It is surprising some enterprising attorney
general has not sought to sue the company on that basis.

Blockbuster needs to read the tea leaves which indicate alternate
distribution methods pose a severe threat to their in-store rental business.
Netflix was one such move. Pay-per-view over enhanced cable networks and
soon-to-be telephone networks pose a serious threat. Walmart's
concentration on DVD sales pose a serious threat to Blockbuster's in-store
sales because of the retailers history was price-cutting its way into a
market.

How does Blockbuster plan to survive as the paradigm shifts?

sed

"sed" <> wrote in message
news:m16je.13754$

> My conclusion is Netflix has the better online service and that is
> their only business. Blockbuster seeing the growth of Netflix
> responded with an online store that has not been carefully thought
> out which seems to be technique in Blockbuster's exective suite.
> Over the past months Blockbuster introdcued "No Late Fees" which
> really was not entirely true since you purchased the DVD after eight
> days overdue. Then the $9.99 one-at-a-time store rental.
> Blockbuster is cast in the role of a follower and a very poor
> follower, at best.
>
> Blockbuster has a tremendous investment of in-store inventory.
> Blockbuster's response of creating an online division reminds one of
> AOL during its growth period. That is, Blockbuster counts subscriber
> growth as evidence of success but ignores the fact they do not have
> sufficient resources, in this case DVDs, to meet the demands of
> subscriber growth. But for Blockbuster loss of in-store revenue to
> Netflix, Walmart and others obviously represented a threat. It is
> surprising some enterprising attorney general has not sought to sue
> the company on that basis.
>
> Blockbuster needs to read the tea leaves which indicate alternate
> distribution methods pose a severe threat to their in-store rental
> business. Netflix was one such move. Pay-per-view over enhanced
> cable networks and soon-to-be telephone networks pose a serious
> threat. Walmart's concentration on DVD sales pose a serious threat
> to Blockbuster's in-store sales because of the retailers history was
> price-cutting its way into a market.
>
> How does Blockbuster plan to survive as the paradigm shifts?

Nicely done. Blockbuster is a "Dead Man Walking." And to answer your
question, I don't think Blockbuster has any reasonable plan that will
insure it's long-term survival. I'll bet management is totally focused
on the short-term and insuring that they have a golden parachute in
place for themselves.
--
Buford T. Justice
The alt.video.dvd faq is located at:
http://aww-faq.org/dvdfaq.html

FAQmeister

FYI

"Netflix still expects to lose $5 million to $15 million this year as it
tries to thwart Blockbuster's aggressive push into online DVD rentals, but
getting Wal-Mart to drop out of the competition represents a major victory
for the tiny company."

Alpha

Here is the full story:

http://apnews.excite.com/article/200...D8A6F0RO0.html


"Alpha" <> wrote in message
news:...
> FYI
>
> "Netflix still expects to lose $5 million to $15 million this year as it
> tries to thwart Blockbuster's aggressive push into online DVD rentals, but
> getting Wal-Mart to drop out of the competition represents a major victory
> for the tiny company."
>
>

Alpha

On Thu, 19 May 2005 15:45:20 -0400, "sed" <>
wrote:

>Today's announcement that Wal Mart is exiting the online rental business and
>working with Netflix leaves those who rent DVDs with that big question, who
>is better?
>
>Two months ago I ran an experiment on my own. Already being a Blockbuster
>subscriber, I signed up for a Netflix trial. For the sake of clarity the
>Blockbuster subscription was a three at a time versus Netflix trial of two
>at a time.
>

Great report! I recently heard that Blockbuster is going to raise
their online rental fee back up around $17.+

Additionally, while I don't rent much from blockbuster since joining
Netflix, I hear from my friends that Blockbuster's in-store
availability has really sucked since adopting their "no late fees"
program.

Zeligg

"Prayer has no place in the public schools,
just like facts have no place in organized religion."

- Superintendent Chalmers, The Simpsons

Zeligg

Zeligg wrote:
> On Thu, 19 May 2005 15:45:20 -0400, "sed" <>
> wrote:
>
>
>>Today's announcement that Wal Mart is exiting the online rental business and
>>working with Netflix leaves those who rent DVDs with that big question, who
>>is better?
>>
>>Two months ago I ran an experiment on my own. Already being a Blockbuster
>>subscriber, I signed up for a Netflix trial. For the sake of clarity the
>>Blockbuster subscription was a three at a time versus Netflix trial of two
>>at a time.
>>
>
>
> Great report! I recently heard that Blockbuster is going to raise
> their online rental fee back up around $17.+


$14.99 rate is guaranteed through Jan '06.


--
Joe

Joe S

Alpha wrote:
> FYI
>
> "Netflix still expects to lose $5 million to $15 million this year as
it
> tries to thwart Blockbuster's aggressive push into online DVD
rentals, but
> getting Wal-Mart to drop out of the competition represents a major
victory
> for the tiny company."

i've noticed that amazon.co.uk is already offering dvd rentals by mail.
I would expect that they are testing and bigfixing their system before
they implement US-wide.

I'd be very interested in seeing how things hash out when Amazon joins
the fray.

-goro-

Ed Kim