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Blockbuster raises its online rental rates

By Ed Oswald, BetaNews

December 21, 2007, 12:07 PM

Essentially ceding its battle for subscribers to Netflix, the company said it planned to raise rates as much as 40 percent.

While it had been performing adequately by some estimates for at least a few years against its larger competitor in the online movie rental space, storefront giant Blockbuster has fallen onto hard times financially, recently overhauling its leadership.

The company even made the unusual move of ending its practice of reporting online subscribers once it began losing them: a sign that the company was no longer interested in the cat-and-mouse game with Netflix.

Blockbuster Online has about 3.1 million subscribers, while Netflix has over 7 million. It was not immediately clear how many of Blockbuster's subscribers would be affected.

Rates for Blockbuster's various plans are due to rise from $2 to as much as $10. Its most popular plan, which allows customers to rent up to three movies at any one time and exchange up to five movies per month in-store, will rise from $17.99 to $19.99.

The top plan, which also allows for three movies out as well, but unlimited in-store exchanges, would go up 40% from $24.99 to $34.99 per month. There was one drop in price: Blockbuster's basic plan, which allows one movie out but no in-store exchange, will drop from $4.99 to $3.99.

All the changes seem to be aimed at ensuring that Blockbuster doesn't lose money on its service. While the company wants to keep as many customers as possible, it also wants to insure a fair return for itself.

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By mrjoeboo

posted Dec 28, 2007 - 3:54 AM

Maybe not the wisest decision for Blockbuster with up to 40% increases, but my fees are only raising $2 a month after being with them for 3yrs (from $17.99 to $19.99) I have been very pleased with them ... 3 rotating rentals, unlimited in store exchanges, and 1 Video Game/Movie rental coupon a month. Sure beats paying for premium channels on cable or satellite when they show the same movies over and over.

Score: 0

By PSXp-ONE

posted Dec 28, 2007 - 2:39 AM

Blockbuster? geez, last time I set foot at a blockbuster store was back in 1996, prices were too high, 3 day rental?...oh man, that was horrible! NOW, I'm not surprised that after all these years the price is still a problem. I can't believe people actually put up with it. Anyway, now things are different, but Netflix is still my choice, I'm loving it!

Score: 0

By horsecharles

posted Dec 27, 2007 - 10:11 AM

"All the changes seem to be aimed at ensuring that Blockbuster doesn't lose money on its service. While the company wants to keep as many customers as possible, it also wants to insure a fair return for itself."

100% times zero equals zero, the number of customers Blockbuster will soon find itself with.

Score: 0

By dracodos

posted Dec 26, 2007 - 11:58 AM

Thing is a company needs to make money off their service. If they can't make money, they can't continue the service. I understand Blockbusters rates except for the 40% increase, thats a little too steep of a rate.

But i wonder if BB should try the idea RedBox is doing: $1.07/day for a new release. Return at ANY Redbox unit location. Or keep it for 25 days and you own it. Granted RedBox only carries new releases and not old. But the model works well IMHO. I haven't touched BB in over a year and netflix i've considered. I just don't like how they package their DVDs. The media is not even in a solid case. Just a flimsy piece of paper in a non-cardboard mailer. WTF is with that?

Score: 0

By AaronDobbins

posted Dec 26, 2007 - 10:16 PM

BB is in the same type of packaging. I think the mailer is a bit more hefty stock of paper, but it ain't no cardboard chief.

Score: 0

By -Wanted-

posted Dec 25, 2007 - 8:16 AM

Keep in mind that Netflix *may* have to increase the pricing of their plan.

The change in Netflix's pricing might be due to the US Postal Service demanding the customary red and white mailers be compatible with the postal system's in-house region and district sorters.

Score: 0

By mshulman

posted Dec 26, 2007 - 2:27 PM

I doubt they'll need to do this. They just need to make some modifications to the packaging or come up with different packaging. The only added cost would be if they had to dispose of any existing packaging or if the new packaging was more expensive, but I doubt it is.

From what I've heard, it sounds like the new packaging would just need to be smaller, like the size of the disc itself.

Score: 0

By Stingray57

posted Dec 24, 2007 - 10:18 PM

I was with Netflix and I signed up with Blockbuster the prices were comparable at the time and I could take the movies back to the store. Then BB raised their prices; I stuck with them even though the prices were lower at Netflix. BB says they are doing to weed out abusers; erm - they're weeding out their customers is what they are doing.

Here now BB is raising prices again. So in the course of like 3 years they have gone from $17 to $35...

I am NOT continuing my subscription with BB. Basically what they are doing is 40% rate increase every 1.5 years.

I'm going back to Netflix...

Score: 0

By Neoprimal

posted Dec 23, 2007 - 1:39 AM

Since I no longer have my Comcast On Demand (cry), I've signed up for Blockbuster. I don't see anything wrong with the prices really, I suppose if you're on one of those little plans it doesn't pay off compared to Netflix.

I jumped to the $25 soon to be $35 plan and I don't see a downside. I get 3 movies in the mail, I can return all 3 and get 3 at the local blockbuster AND 3 more come while I'm watching the 3 I got from the store. Seems win/win to me in a world of $3-4.99 dvd rentals. But not everyone wants to spend $35 a month on DVDs I suppose.

The lower plans seem a bit foolish, and they've now lost their edge over Netflix, even with the 5 in-store exchanges on the mid-level plan.

Netflix really doesn't come close once you get the Unlimited Total Access Plan.

Score: 0

By PatrynXX

posted Dec 25, 2007 - 10:20 AM

Cept the movies are out of stock and it takes about a week to get the movies that are about 15 spots down the list. Nah, far cheaper and worth it with Netflix. At least I get most of the movies I want with Netflix.

Score: 0

By mshulman

posted Dec 24, 2007 - 2:18 PM

And how many movies are you watching a day?

I guess if you watch 2-3 movies a day, blockbuster makes sense, but so long as you don't watch more than 1 movie a day for the most part, Netflix is cheaper and the turn over is just a two days usually.

Score: 0

By Stormprobe

posted Dec 22, 2007 - 8:54 PM

I tried NetFlix, then tried Blockbuster, then went back to NetFlix because it is better.

Score: 0

By ogman

edited Dec 22, 2007 - 6:10 PM

Cancelled.

Score: 0

By DZNetworks

posted Dec 22, 2007 - 4:43 PM

Who rents movies any more? Online on demand cable is where its at now.

Score: 0

By mjm01010101

posted Dec 23, 2007 - 12:41 PM

Let's see, a hundred+ a month for crappy TV shows and infomercials, or $10-$30/month for pure movies that you want to watch?

Score: 0

By PatrynXX

posted Dec 22, 2007 - 11:10 PM

kinda hard to keep online content though. although anydvd supposedly has a fix for cinemanow. the quality sucks. except I do like Netflix's instant movie access

Score: 0

By snsh

posted Dec 22, 2007 - 4:18 PM

I don't understand why Blockbuster, Netflix, and Redbox/Coinstar don't just all merge together.

Score: 0

By -Wanted-

posted Dec 25, 2007 - 8:11 AM

Yes, Netflix, Blockbuster, and *that other one* should merge together, so they have bilk and gouge customers to their collective hearts are content.

Score: 0

By improvelence

posted Dec 23, 2007 - 11:00 AM

What an asinine comment. Ever heard of competition? Maybe the oil companies should just merge with the government...oh wait they already have.

Score: 0

By yountmj

posted Dec 23, 2007 - 12:47 AM

While you're at it, see if you can get Ford, Chevrolet, and Dodge to merge as well.

Score: 0

By PSXp-ONE

posted Dec 27, 2007 - 3:04 AM

Lol...yeah, maybe McDonald's, Burger King and Jack in the Box will do the same! =)

Score: 0

By smckenney

posted Dec 22, 2007 - 10:15 AM

Blockbuster just lost a customer. We don't have a Blockbuster anywhere near where I live. Matter of fact, while Netflix might have been a competitor, Family Video was a bigger one. I haven't rented anything from Family Video in 6 months (coincidentally the same amount of time I have had Blockbuster) but $16.99 (no place for dropoff so I only mail back) was my price point. $18.99 will end my membership.

It was a nice run but I suppose I will just switch to Netflix. Nice job Blockbuster. You pushed me away.

Score: 0

By GhoS

posted Dec 21, 2007 - 11:33 PM

It does seem like one of the stupidest moves in business to raise rates when you are losing money. Raising rates will not attract new business. They thought innovating was doing the in-store exchange stuff but they were still thinking backward. Most people who used Netflix because of convenience, there is no way these people would be swayed by being able to drive somewhere.
Blockbuster needed to innovate, maybe offer downloading movies sooner before Netflix started doing it, or maybe extras that other companies can't get to ship with the movies, like gifts or something using the clout they once had.
I don't know exactly, but you'd think someone could have come up with something better than raising rates.

Score: 0

By PatrynXX

posted Dec 21, 2007 - 9:37 PM

I left Blockbuster in September after they raised their rates from $18 to $25 for the unlimited option. Now it's $35? clearly haven't learned their lesson. I guess they are planning to commit suicide. Netflix looks like shoplifting now. So let me get this straight. in the dead of winter one has to spend $35 just return it the store and chances are the movies you want aren't there anyway. Ain't risking a car accident in the snow for that. Obviously for work yes, but not a bloody movie. I'll stick with Netflix until Blockbuster finds it's brain again.

Score: 0

By zridling

posted Dec 21, 2007 - 11:41 PM

Same here. I switched to Netflix when the christian store blockbuster jacked their prices early this year. They also seemed to limit the number of movies you could be mailed each month, much like many ISPs claim "unlimited" service. Besides, Netflix has a far better selection.

Score: 0

By mshulman

posted Dec 21, 2007 - 10:02 PM

Why change even then? Stick with the company that gives you the best price and service combination.

In my opinion, that's been netflix since about the time they came out.

Score: 0

By Hollywood__

posted Dec 21, 2007 - 6:45 PM

Netflix won't raise thier rates, if you remember, they lowered them to match c***buster, not the other way around.

I love using Netflix for BD rentals, I also rent HD-DVD's that I would never buy without seeing first.

Blockbuster may be trying to get out of the online rental business all together with this move.

Blockbuster still calls once a month as I still have an account but haven't set foot in a store in ten years easily. I used Hollywood (the irony) a few times but they are expensive and I really hate thier stores.

Score: 0

By DakotaSunRunner

posted Dec 21, 2007 - 5:59 PM

Not to worry all you who cancelled Block Buster and went to Netflix. Just like last time there was a price change to lower prices and Netflix followed suit, Netflix will also do the same this time. I cancelled them both, waste of time.

Score: 0

By jeffca

edited Dec 21, 2007 - 5:53 PM

But netFlix has a small selection of blu ray....

Score: 0

By Grazer

edited Dec 26, 2007 - 5:14 PM

Actually, I am pretty sure Netflix has a statement somewhere on their website that outright says they stock all available HD titles (of either format) and plan to stock any that will be released.

Score: 0

By mshulman

posted Dec 21, 2007 - 10:03 PM

Huh?

Netflix seems to have all the HD DVD AND Blu-ray titles.

What are you talking about?

Score: 0

By Skyfrog

posted Dec 21, 2007 - 4:52 PM

"Sir, we're losing customers by the dozen to Netflix. What should we do?"

"I have an idea, we'll raise our prices."

"Brilliant!"

Score: 0

By elopez17

posted Dec 21, 2007 - 5:19 PM

Typical American mentality

Score: 0

By ogman

posted Dec 22, 2007 - 6:14 PM

American? Bull$hit!

More like typical corporate mentality, and if you think that is restricted to one nationality, then you are a bigger idiot than the CEO of Blockbuster.

Score: 0

By FubarJeb

posted Dec 21, 2007 - 4:56 PM

lawl

Score: 0

By cranbers

edited Dec 21, 2007 - 4:42 PM

The deals they used to have, like 9.99 a month for 1 movie at a time with unlimited in store exchanges, now that was a deal. I was getting so many movies I couldn't keep up. Especially the 3 at a time when they first rolled out the in store exchange program, I bet I rented 20 movies a month for 16.99, it was insane. The shipping alone on those movies had to cost them half that.

So, while those deals were a little too good, it does make sense to get it under control. But that is what made them so desirable compared to netflix.

Plus the other problem is the local stores were all out of movies, thanks to the no late fees program, add in the free movie exchanges, its amazing they made any money at all.

Those types of deals went bye bye, now they are going to raise the rates?

It's crazyness. One thing I did notice is that netflix does have movies, the rare old seasons in a lot more. So you actually get what you want, makes sense to me.

Score: 0

By plague201

posted Dec 21, 2007 - 4:03 PM

This almost tops the retarded move of Sony revealing that there would be no backwards compatibility on the 40 gig PS3.... almost.

Score: 0

By Program86

posted Dec 21, 2007 - 3:43 PM

If you are surprised by this move you are beyond ignorant. Blockbuster has been screwing their customers for over 2 decades. They are greedy and underhanded.

NetFlix for life.

Score: 0

By MikeTechno

posted Dec 25, 2007 - 12:26 PM

Now that I will grant you. Recall that they didn't just come up with their "End of Late Fees" campaign out of the goodness of their hearts. They did it because RedBox and NetFlix were absolutely eating their lunch. It was a move they were forced to make by far more innovative and agile competitors. What their recent moves have show us is that they can't innovate and they are unwilling to compete. Great go to market strategy there guys.

Score: 0

By PatrynXX

posted Dec 21, 2007 - 9:40 PM

For awhile it seemed Blockbuster had gained a good brain, but the bad apples from years ago are back and ready to go bankrupt.

Score: 0

By MikeTechno

edited Dec 21, 2007 - 3:24 PM

What? Are you kidding me? Dozens of six figure MBA's on the payroll at HQ and THIS is what they come up with? They should be ASHAMED of themselves. This sounds like the decision of an Accounting MBA....one that should be FIRED!

Come on Blockbuster, your competition is LAUGHING at you. You are market leader and a dominant player in your industry and this is all the better that you can come up with? What a shame. I expected so much more from you. We all did actually.

Score: 0

By Hellcat_M

posted Dec 21, 2007 - 2:55 PM

Well Blockbuster is loosing customers anyway, so I guess they'll loose even more. BB is doing really bad because they can't keep up with netflix, you'd think they would try and bring better service at a cheaper price to win people back but I guess they want to go out of business.

Score: 0

By MikeTechno

posted Dec 25, 2007 - 12:29 PM

Remeber, it isn't just NetFlix that is eating into Blockbuster's marketshare. RedBox is having a very big impact on them as well. For a while there, I heard that Blockbuster was going to be coming up with their own custom designed RedBox type of vending machines and that they were going to put them right outside of every single Blockbuster store in the country to try and "out RedBox RedBox" so to speak. Something tells me now that those planes have likely been either dramatically scalled back or possibly canceled all together.

By the way, I hear that RedBox is growing like gangbusters all over he country.

Score: 0

By kashin

posted Dec 21, 2007 - 5:50 PM

Please learn the difference between lose and loose, because you sound ridiculous. Hint: lose is the opposite of win, whereas loose is the opposite of tight.

Score: 0

By billweh

posted Dec 21, 2007 - 2:22 PM

don't worry - Netflix will join the rate hike soon I'm sure. Why not - now they'll own the field. They just have to stay below BB.

Score: 0

By plague201

posted Dec 21, 2007 - 3:57 PM

Netflix might as well lower their prices to finally end BB's reign.

Score: 0

By Curtie_1

posted Dec 21, 2007 - 1:39 PM

I;m not too happy w/ either. I live in a rural area and it has been impossible to get any thing from either

Score: 0

By forgie

posted Dec 21, 2007 - 1:12 PM

How wise of Blockbuster, thinking about itself and encouraging current customers to go to the competitor by rising prices. No improvement to the service, just raising the prices because they want to. I bet that 3.1 million goes down pretty quick. Idiots.

Score: 0

By SGD

posted Dec 21, 2007 - 1:33 PM

You are right I canceled.

Score: 0

By cap737

posted Dec 21, 2007 - 3:02 PM

DITTO!

Score: 0

By DaEnigma

posted Dec 21, 2007 - 5:12 PM

I canceled when they dropped in store exchange to 5 per month and this just adds insult to injury. Thus far Netflix has been great, except I hate their mailers.

Score: 0

By robdec

edited Dec 22, 2007 - 8:43 AM

My rate went up $2.00 but I still enjoy blockbuster .I get 2 out at a time and unlimited in store exchange and the big part for me 1 free game rental a month!! If they kill my 1 free games rental a month then I'll leave. All for $16.99.

Score: 0

By ogman

posted Dec 22, 2007 - 6:16 PM

Don't worry, you're next.

Score: 0

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