Netflix vs Blockbuster

Finally here's my take on it

2007-07-25T16:06:00.001-07:00

Since I dont have any financial or philosophical interests in who wins this battle its very simple for me to summarize.

Blockbuster = (Netflix - some web site features) + flexible same day or weekend store rentals

Since "some website features" is negligible for me in my overall movie rental experience even if "flexible same day or weekend store rentals" was used very rarely its still great flexibility and I'm all for flexibility.

So for now I'm a Blockbuster customer again.

Its for them to screw up and send me back to Netflix atleast for now ..

Blockbuster vs Netflix .. Things I would recommend to the companies

2007-07-25T16:05:00.002-07:00

Even though we are seeing a new "nasty" price war developing here. According to me slashing away at price will not necessarily lead to growth in customer base or a good retention strategy.

It might actually help BB as they might be perceived as gaining ground and pressuring NF into this situation.

Blockbuster

Focus on execution of the online business or Netflix is going to eat your lunch.
Maybe even look at spinning online off from the store business and have a loose tie up between the two. So the debt does not carry and it does actually become like (Netflix plus store exchange benefits due to the tie up). Right now that message is getting blurred in the financial/debt situation news that seems to overshadow Blockbuster whenever its written about. Frankly as a I care less. If tomorrow BB goes bankrupt I can shamelessly go to Netflix. No qualms about that.
Stay the course on movie delivery schedules especially for new releases cause that's what drives average "Joe" customers like me. Quite frankly I've seen Netflix slip here recently.
Even if closing stores is part of your restructuring plan, ensure that a store is still easily accessible in large metro areas.
Since most BB stores are in prime commercial locations, see if you can tie up with a National fast food chain and share the lease/expenses. Seriously revisit your store layout plans, see if you can do more with less.
Ensure that you are at par with NF on the web store front and in general the Web 2.0 community participation stuff.
Tie up with Apple iTunes or others to see if you can provide pod stations in your stores for quick selection and super fast uploads of video and audio on their pods.

Netflix

Focus on your core business. You seem to be slipping lately with poor delivery, fewer new releases and website outages.
Drag BB into a price war. They cannot sustain lower prices for a long time with their overhanging debt. Sooner or later they will give. But I guess it means thinner margins and slower stock appreciation on Wall Street.
Look for a video download related inflection point and sell the company to an Amazon, Yahoo or even Wal-Mart. Though I would highly recommend Apple. They seem to be the ones who have a great strategy for online media right now and renting online video's might dovetail well into that.
Take Netflix worldwide. Challenges in guaranteed distribution etc might be a problem with mail not being that reliable everywhere, but surely worth a try in some other countries.
Watch Now does not seem to be the silver bullet out of this situation. See if it can be easily tied to set top boxes or iPods for storage and/or viewing.
More Web2.0 focused from a collaboration and participation perspective rather than keeping on sprucing the website experience. As a customer I will be wowed only so far with AJAX pop ups and inline movie contexts etc showing up.
Have more history/interactions on your website. Today there is no place I can go look up all my past interactions with Netflix.
Have a points or rewards program. Incentivize customers by awarding points if they return new releases within 5days and let them cash those points to buy pre-watched DVD's or something. Where's my fuc#1ng reward for being a loyal customer for 7 years
Watchout cause if BB executes it'll eat your lunch.

Netflix vs Blockbuster .. how to they compare .. my take on it

2007-07-25T16:03:00.001-07:00

Feature	Netflix	BLOCKBUSTER
Browse	Y	Y
Queue	Y	Y
Recommendations	Y	Y
Friends & Family	Y	Y
Ratings	Y	Y
Inventory	65,000	60,000
Plans	$16.99 for 3 DVD's	$17.99 for 3 DVD's*
Distribution	Mail, Watch Online	Mail, In Store
How it works	>>	>>
Main User Gripes	No weekend or last minute flexibility to change movies. Lack of online support interaction history. Sometimes too smart for themselves (and us) through their AI algorithms.	Online experience "Ok". Late fees still lurk out there somewhere when you rent from store.
Notes	The number of hours for "Watch Online" are determined by to your plan. So a $16 plan gets you 16 hours of viewing time.	If you rent from the store you have to return the DVD within its stipulated time. BB promptly calls you with a reminder on your phone and you have 7 addl days grace. * We verified this by intentionally defaulting on our very first DVD rental from the store. If you do not return the DVD in time you get charged a stocking fee of $1.50 *Allows 5 in-store exchanges a month. Works for me as there are 4 weekends in a month.

Advantage - BLOCKBUSTER

The Ups and Downs with Netflix

2007-07-25T16:01:00.003-07:00

The last 7 years with Netflix have been mostly sunny with some scattered showers. Maybe its a seven year itch or I've become too demanding, but the seductress in "Red" no longer seems as attractive to me as it did in 2000.

For the most part movies were readily available and the wait for new releases would often be short and quick. But this kind of availability for new releases has been patchy off late and the wait is usually longer. I read somewhere a while back that Netflix has some AI based algorithm that decides whether you should be the recipient of a newly released DVD or someone else based on the input to this algo. To which I can Bullshit, according to the law of the net it should be fair and square, who hit the button first and booked it.

We started using the "Rate a movie" and "Recommend a Movie to Friends/Family" feature once it was available. But in a year or so they fell by the wayside as I would only fleetingly rate a movie and the only real recommendations I would care for were ones that came from close friends and family when I was in actual conversations with them.

One of my biggest gripes with Netflix has been that whenever I would send them all 4 or say even 3 DVDs back all together sent in the same mailbox and all. The return would always be staggered, I would always get 2 DVD's right away and the 3rd or 4th depending on the number I returned would always be a day late. At first I thought we were imagining things, but when you have a service year round, its very easy to test and monitor such things. So we tested it out a few times and lo and behold it would happen every time. We were really depressed that Netflix was somehow trying to throttle the DVD's that come to us in one day. I even wrote them a fuming email complaining about it and swearing that I would shift to the newly launched WalMart DVD rental by mail service (Remember WalMart had tried its hand with a sorta Netflix killer kind of service, but was not very successful). The support person at Netflix assured me that there was no such thing and it must simply be a logistics delay that we must've noticed a couple of times. So I monitored it again a few times and yes it was happening everytime. Now some people might say, what's the big deal about that you certainly are not going to see 3 movies in a single evening so why not wait a day for the 3rd to arrive. Here's what didnt work for us. We used to time our DVD returns in such a way that there would be a fresh lot of DVD's arriving for the weekend (which is when we watch most of our movies). But with the two DVD's out of three arriving on a Friday or Saturrday and then the third arriving on a Monday it would piss us off and disrupt our movie viewing plans. So it mattered to us Mr Netflix, eventhough you tried to brush it under the carpet as a logistics issue.

By the way the issue never got resolved.

While writing this blog over the last few days I found out through Google that Netflix actually had a class action lawsuit filed against it for this very reason. Unfortunately the deadline for registering for this class was in 2006 to get any benefits from the settlement. So didnt really get anything out of it :-(, but glad someone knocked some sense into them.

"It became common knowledge over the last year among NetFlix subscribers that if you returned your movies to NetFlix too quickly they would begin to throttle your subscription by slowing down when they recorded a returned video, and when they would release the next movie in your rental queue. A class action suit on behalf of all NetFlix subscribers was initiated alleging that NetFlix did not truly offer unlimited DVD rental as they claimed." (source: http://www.acmetech.com/shopping/movies/netflix-class-action-suit.php)

The rumblings of a new relationship

2007-07-25T16:01:00.001-07:00

In the first six months I was thrilled to receive my DVD's in the mail now and not having to drive before store closing to drop DVD's back to avoid late fees.

However the new relationship was about to see its first rumblings. For some reason (dont remember now) I had to change my Netflix password. Went ahead and changed it. The next time when I tried logging in, it just kept erroring out saying invalid password. So I tried every combination I could think of and finally gave up. Then wrote an email to Netflix through their hidden (or shall we say nicely tucked away contact email address). After some back and forth with their support to provide additional information they emailed me saying that because I had used a special character in my password the underlying database that they were using would not allow access. I was shocked for starters that they knew what my password was, but once I got over that (considering that someone somewhere in an internet businesses IT infrastructure would know your password or have a way of getting to it) it troubled me that instead of saying sorry we dont support a strong password with special characters at this point, they told me to change my password to alphanumeric and had no explanation of how the "Change Password" form allowed me to perform the operation but wouldnt subsequently allow me to login.

Anyways since this issue was not critical to the quality my DVD rental service just decided to live with it.

I believe the CEO at Netflix was interviewed on TV once and could not find the contact page/info himself. It was added immediately a few days later. (**This is not confirmed, but I remember seeing this on TV, maybe I'm confusing it with another website).

In either case there is now an actual contact number on the Netflix website where presumably a human answers your questions at some point.

But the lesson here was that internet businesses are different, often times they tend to hide behind meaningless FAQ's that cannot be searched intelligently or easily and want to keep costs low by not letting you speak or exchange emails with a human.

About me and the history with Netflix

2007-07-25T16:00:00.000-07:00

Like most adults in the US I was a Blockbuster video and DVD rental card member before I ever heard of Netflix. In the summer of 2000 when I first heard of Netflix, the concept was new to me but the lure of returning DVD's at your own leisure and no late fees convinced me that this was the DVD rental service to have.

I joined Netflix in Sept 2000 and consider myself as one of the early adopters of this service. But since Netflix started sometime in 1997, joining in Sept 2000 probably makes me a bit of a dinosaur compared to the real early members. This is what their website looked like at that time.

I started with a 4 at-a-time (Unlimited) Plan that was costing me about $21.60 per month at that time and was adjusted somewhere along the way in 2004 to $19.47 a month (current).

Since I was single and travelling at that time I remember taking my Netflix DVD on the road and plane to my project location, viewing the DVD's and dropping all but one (for the return flight) in the mailbox somewhere in Colorado on Wednesdays and then getting DVD's in my queue show up at home by the time I was back from my project on Friday.