Right now the undisputed king of the online movie rental business is clearly Netflix. I have personally never used their service since they don’t offer it in Canada, but I have a few friends who do use it and have normally spoken quite highly of it. However, in recent months Blockbuster has been leveraging their brick and mortar stores to offer customers more flexibility and convenience when trying their online service.
Basically what they did was offer their online rental customers the option to return their movies in the mail (just like Netflix) OR… they also had the option to return the movie in any Blockbuster store. The advantage was that 1) The movie was instantly registered as “returned” and the next movie on their que would be shipped out… AND… 2) By returning the movie in the store they also got a free in store rental!!!
Back in December I made the following comment about this move:
This is a VERY smart move. Try to get people to experience how easy and fast it is just to return a film in store (if you want) and pick up a free in store flick. The move COULD very well prompt some Netflix users to switch.
Well, news has come out that since Blockbuster has started this new initiative, Netflix stocks have started to tumble. The IMDB give us the following:
Online movie renters Netflix saw its shares tumble nearly 10 percent to $21.70 Wednesday after saying that it expects to end up with about 7.3 million subscribers by the end of the year, 13 percent fewer than it had forecast in January. Shares in the company have fallen 26 percent over the past year. Netflix apparently was hit hard by a rival service from Blockbuster that allows customers to receive movies in the mail, then exchange them in Blockbuster stores. Reporting on Netflix’s woes, today’s (Thursday) Los Angeles Times commented that Blockbuster “is finally getting some payback in its battle with rival Netflix.”
I personally have no vested interest in this Netflix vs. Blockbuster war since I can’t use either of their services. All I’m saying was that leveraging the built in advantage that they had with existing physical outlets for their customers to use was a brilliant move… and one that seems to be paying off.
