August 18, 2007
Bye Bye, Blockbuster
From the day we joined, we knew that Blockbuster Online Total Access' days were numbered. Is it possible, we wondered, to sustain a business model in which it's effortless to watch 24 movies a month for $17.99, or 75-cents each? Clearly, the answer is no.
If you were a Netflix subscriber a couple of years ago, you might remember a similar situation. The company realized that they couldn't sustain profitability with the volume of movies going out each month to active subscribers. So what did Netflix do? They punished their best customers.
While Dave and I were out evangelizing Netflix to anyone who would listen, the company began holding DVDs for a few days to slow down our account activity. That is not the way to treat your best word-of-mouth marketers. Netflix was sued for advertising "unlimited" DVD rentals, when it was really throttling back the service for Netflix die-hards.
A few weeks ago, the first rumblings of change were heard at the counter of our local Blockbuster store. Dave stopped by to exchange our mailers for movies when the store manager ground his transaction to a halt:
Store manager: How do you like your Total Access free rentals? [He placed an accusatory emphasis on "free rentals" that we've heard before; as if we're freeloading or pilfering movies by using the plan the way it's advertised.]
Dave: It's great, we love it.
Store manager: Do you need any candy or popcorn?
Dave: No, thanks.
Store manager: Come on, can you just buy something? My sales are down today, would you help me out?
Dave: Um... no.
Dave, a loyal customer, came out feeling annoyed and disgusted. Blockbuster associates had pitched the Total Access plan to us for months as we rented one-off movies. "Are you sure you don't want to join? Unlimited movies! In-store rentals! Free map to Valhalla!" As soon as we became members, their attitude changed to sullen and haughty.
Today came the announcement from Blockbuster:
Due to changes in our subscription plan pricing, your current BLOCKBUSTER Total Access™ plan, Unlimited Online DVDs up to 3 at a time plus unlimited in-store exchanges each month for $17.99, will no longer be available at the current price.
You will be moved to our new plan that includes Unlimited Online DVDs 3 at a time plus up to 5 free* in-store exchanges for $17.99. This plan will not include an e-coupon for in-store DVD and/or game rentals. The new subscription plan and pricing will go into effect on your regular monthly billing date following August 31, 2007.
In addition, exclusively for BLOCKBUSTER Total Access customers, we have introduced in-store movie rentals for $1.99 per movie should you need more than the in-store exchanges included in your plan.
The plan change costs ten extra dollars per month to retain fewer services than we have now. A 66% price increase is a pretty big one to swallow. Dave and I are seriously annoyed at both Blockbuster and Netflix right now. Why didn't they determine the profitable price point for their services before rolling it out? I've been convincing people left and right to try Total Access and my reward is a 66% price hike?
At this point, we're leaving Blockbuster completely. The company won't care. They'll probably breathe a sigh of relief that they've lost one more high-volume renter. I challenge anyone out there to create a mailed-DVD rental service that can sustain itself without punishing people who love the service.
Maybe we'll order cable. Maybe we'll just buy Boggle. There's a long Vermont winter coming up...
Comments
And when I asked exactly how many in-store exchanges are allowed each month I got this "canned" response from their customer service department:
Hello William,
Thank you for contacting BLOCKBUSTER Online Customer Service.
I appreciate the time you have taken to write to us, William.
Like all retail businesses, we must periodically review our pricing structure. In introducing a wider range of subscription plans, we considered a number of factors including the number of in-store exchanges on a given account. We’re giving our most frequent renters like yourself the option of either continuing with unlimited in-store exchanges at a higher price point or moving to a plan where the number of in-store exchanges is fixed if you'd like to continue with the same rate.
We feel we are still delivering a great consumer value and encourage you to continue your membership by selecting one of the new plans we offer. You can find the details of what is available via "My Account" in the "Subscription Plan" area. Please remember that if you do not select one of the new plans we have to offer before your next regular billing date, we will not be automatically renewing your membership. Thank you very much for your inquiry.
Again, thank you very much for writing to us. We take feedbacks and suggestion seriously. Blockbuster is open to all of that to help improve our service and to be able to give a better help to you, our customers.
We will do our best to resolve this matter. For the mean time, please smile and enjoy your day.
Always glad to be of help,
Germiniano
Customer Care Associate
BLOCKBUSTER Online