$2 per month and other reasons why I’m leaving Blockbuster for Netflix

Thinking about a great last-minute gift that doesn’t require going to the mall or waiting for the FedEx driver to find your house?  Give a subscription to a DVD-by-mail service.

Better, give a Netflix subscription.  This from a for-the -moment Blockbuster Online subscriber.

Here’s the full story.

I like the ability to go online to the Blockbuster site and pick out movies for family viewing.  When we first signed up, we considered the monthly fee on par with about what we spend on visits to the retail store, on top of the video game rentals and miscellaneous purchases we make. And we chose Blockbuster as we already have a local store that the kids enjoy carousing through as they make their selections for a weekend evening movie night.

But the proverbial straw has landed on my back, and I’m about to contribute to what the industry calls “subscription churn.”

Translation: I am leaving Blockbuster “Total Access” online, DVD-by-mail service for Netflix.

In case you missed the news, Blockbuster is raising prices for their online service, which will mean an increase in the monthly cost for many (MSNBC estimates that increases of up to 40 percent will impact current customers and all new customers).  And the way the message was delivered to me was quite extraordinary:

“We know that during this busy time of year the convenience of BLOCKBUSTER Total Access is especially important to you. Have your movies delivered right to your door. If you want new movies right away, exchange in-store. And with free shipping both ways and no late fees, it’s easy to enjoy all the movies you want for as long as you want.

“To continue to bring you the unmatched convenience of both online and in-store DVD rentals, your monthly subscription fee will change slightly from $9.99 to $11.99.”

Uh, hello?  Care to explain what I am getting for the 20 percent jump?  No lament about the rise in processing and labour costs, postage increases or price of recycled paper in China?  The only thing I see in the mail is that it’s the same service, it just costs more.

It will be funny to see what impact a two-dollar-a-month increase will have on customers.

If my cable bill rose by 20 percent in one month, I might be prompted to move to an alternative.  If my mobile phone service rose by 20 percent, I might consider changing carriers.  

I’m surprised by this move after learning that Blockbuster lost in the neighbourhood of 500,000 online customers last calendar quarter. I enjoyed the privilege of being able to return movies back to my local store for a free exchange, but the additional cost outweighs the benefit when I think of the few times we actually used the service.

Also, no note in the email to me from Blockbuster of the options I have as a Blockbuster customer to downgrade my subscription to subscription-by-mail only. On the blockbuster site, I found references to the current $8.99 per month fee for mail-only, and read in the above article that the “basic plan that lets subscribers keep one DVD but doesn’t entitle them to free in-store exchanges will drop from $4.99 to $3.99 per month.” (After posting this entry, I found on the Blockbuster customer service page has more info on the price restructuring in order to learn more about the price increase.)

One of those may be better for us.  But I get a sense that this is a beginning of a slippery slope, and that the momentum and popularity of Netflix is added justification to make the move.

Not to mention that Netflix offers DVD by mail in addition to live customer service and movies over the Internet.  And with the hiring of my previous boss, Anthony Wood of ReplayTV fame, I expect more great things as Netflix looks for more innovative ways to deliver movies via the Internet, with rumours recently that the company is considering a $50 set-top box.

“Netflix has all but said that it will introduce some type of set-top box to get video to the TV. The company hired Replay TV founder Anthony Wood as its VP of Internet TV in April and in May, CFO Barry McCarthy said the company has been working on a solution for the last two years but wouldn’t discuss it’s “box strategy” until later this year or next.”

(Hmmm… CES is just around the corner… perfect timing for a Vudu-Netflix acquisition announcement.)

As much as I would rather see Xbox Live be the set-top box in our living room that provides over-the-Internet movies, I think that this will continue to be first and foremost a gaming platform, leaving a breadth of broadband movies to Vudu and companies like Tivo, DirecTV and Echostar. 

Nearly two years ago I predicted that as consumer broadband installations increase, subscription music packages (Rhapsody, Zune) would increase at a faster rate than online music sales (iTunes).  In that vein, I would like to see a monthly subscription video programme from Xbox Live, perhaps in combination with a company such as Netflix.  Full disclosure: Reed Hastings is on Microsoft’s board, and ‘though I have no insider knowledge of any such deal, it would be super to have a Netflix page on Xbox Live. 😉

It appears that the article in the Times was right: Netflix customer service is a strategic weapon against your DVD-mailing service… 

“Netflix’s decision to eliminate the e-mail feature was made after a great deal of research, Mr. Osier said. He looked at two other companies with reputations for superb phone-based customer service, Southwest Airlines and American Express, and saw that customers preferred human interaction over e-mail messages. “My assessment was that a world-class e-mail program was still going to be consistently lower in quality and effectiveness than a phone program,” he said.”

… And now, so is the price.

(A side bar: Netflix chose Oregon as the location for the customer service call centre as one exec “found Oregonians to be polite.”)

In defense, I should say that I have found the representatives at my local Blockbuster to be super helpful, once calling and holding for us a new, popular movie once it was returned by another customer.  But unlike Netflix, you can’t talk to a Blockbuster customer service agent, just send them an email through the Blockbuster online customer service web page.)

I agree with Thomas Hawk who wrote on his blog…

“Blockbuster has been in liquidation mode…

“For every store that goes out of business, it creates a big opportunity for Netflix to expand into their market. Blockbuster might be able to move some of these customers online, but the loss of the higher transaction revenue will certainly be felt as Antioco & Co. continue to dismantle the company piece by piece.”

Another sign of this: Shane Evangelist left Blockbuster Online for U.S. Auto Parts Network as Chief Executive Officer (as reported in this PR). Mr. Evangelist previously served as Senior Vice President and General Manager of Blockbuster Online until this past October.  The role for managing the online business now falls to CIO Keith Morrow (as noted here), so he understands why a previously enthusiastic customer (one who also rented and purchased product in your retail stores) is leaving Blockbuster for Netflix.

BTW, interesting to note that Mr. Morrow is on Facebook (as am I).  Care to poke him with your opinion of the price increase? 😉

Tags: Microsoft, Customer Service, Customer Support.

Delicious Bookmark this on Delicious Bookmark and Share

Also available at


Of interest: Local news and blogs provide details on new Zunes

Of interest today as I’m home sick (cough-sneeze)… King 5 news reports (from the AP) on the new, redesigned Zunes… a family still with FM radio and wireless sharing, but with a larger hard disc and (finally) with flash-memory…

“Microsoft Corp. took the wraps off its second-generation digital music players Tuesday, showing three new Zunes that bring the software maker’s offering more in line with Apple’s market-leading iPod.”

… and this report on betanews

“Although the news won’t officially hit until midnight tonight, further details of the Zune players have leaked ahead of Microsoft’s secret Tuesday night event for press and bloggers.

“Sources have confirmed to BetaNews, as well as additional information from Zune news site Zunerama indicates that there will be two new Zunes, including a new 80GB HDD-based model along with 4GB and 8GB flash based versions.”

… and this on… an excerpted FCC filing on 4 GB and 8 GB Flash Zune configurations…

“The sketch published indicates that the new player will be substantially more compact than the hard drive-based Zune, but it will keep the general layout of the device consisting of a main navigation area in the shape of a scroll-wheel as well as dedicated play, pause and back buttons.”

Last, this from Mary Jo Foley with a link to What’s on tap for tonight’s Zune launch 

“As with Searchification, Microsoft has invited reporters and bloggers to an event which they aren’t allowed to write publicly about until after midnight (EST) on October 3, sources say. At the October 2 invitation-only Zune launch, Chairman Bill Gates and Corporate Vice President of Design and Development J Allard are slated to take the wraps off the Version 2 Zune devices, according to sources claiming familiarity with Microsoft’s plans.

“Besides the new Zunes (“Scorpio” hard-drive and “Draco” flash-based units), Microsoft is expected to unveil a new beta community site for Zunes, an enhanced method of discovering new music and a line of Microsoft-developed accessories (perhaps an FM transmitter and dock?). A new online Zune store, which is more tightly integrated with the Xbox Live Marketplace, also might be part of this evening’s rollout, sources said.”

Update:  Gizmodo reports that “Microsoft’s just confirmed with us the November 13 release date of the new Zunes—previously stated by Amazon. Whether or not the firmware for the old Zune is coming on 11/13 is still unconfirmed.”


Friday Humour: Spinal Tap’s set from Live Earth

Yes, I am a Spinal Tap fan for many years. I’ve had the pleasure of seeing the band perform live in concert and (!) met them in person.

Now here’s their clip from Live Earth on MSN:

Click on all three clips in the left-hand nav.


Tags: Spinal Tap, , .


MTV Networks on the SharePoint Customer Evidence Site

This from Kristian Kimbro Rickard’s blog on Microsoft Office SharePoint Server (aka MOSS)…

SharePoint Customer Evidence Site (

“Need some customer evidence to share with your customers about what our customers are doing with SharePoint? Here’s a site that consolidates everything. Great ones for Enterprise Search, MOSS 2007 for ECM, MOSS 2007 for automating business processes, etc.”  

On the site you can read about how companies from ACNielsen and AXA, to Johnson & Johnson and Mary Kay are using MOSS. 

In one example, you can read how MTV Networks uses MOSS 2007 to automate “a paper-based process for new employees… a collaboration site for project management… [and] used the business intelligence capabilities of Office SharePoint Server 2007 to create a dashboard that provides enriched analytics on application metrics, saving six hours a week with an automated data submission process.”



BusinessWeek’s Wildstrom says the Sansa Connect is slick

Stephen H. Wildstrom of BusinessWeek applauds the new SanDisk Sansa Connect in this article, calling it a “slick Wi-Fi music player.” This new device integrates Yahoo’s subscription music service…

“The $250 Sansa Connect is the result of a collaboration among SanDisk, Yahoo!, and Zing Systems, which is responsible for the software and network infrastructure. The Connect, which is smaller than the standard hard drive iPod and bigger than the nano, has 4 gigabytes of memory, which you can double by adding a memory card. You download music to it—MP3s and copy-protected or unprotected Windows Media files—from a Windows PC. But the important advance is the device’s deft use of Wi-Fi networking.

“To get the best experience with Wi-Fi, you really need an all-you-can-eat subscription plan. The iPod/iTunes pay-per-song approach that forces you to sync with a PC just doesn’t cut it. Apple (AAPL) never believed its customers would spring for subscriptions, which is why there’s no Wi-Fi iPod. Even the upcoming iPhone, which will have Wi-Fi, won’t be able to download content from the iTunes Store over the air.

“It remains to be seen if Wi-Fi plus subscription can give SanDisk, Yahoo, and Zing traction against the iPod juggernaut. But I find the Sansa Connect a welcome addition to the field of music players.”

Cool. I am tripping down to the electronics store this weekend to take a look. Great to hear how the Connect works well with on-line photos, too (it can access Flickr).