Blockbuster raising online prices again

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21 Dec 2007, 08:36 AM
Gonzo

Blockbuster raising online prices again

Quote:

DALLAS - Blockbuster Inc., which has been losing money on online movie orders, is boosting prices of its DVD-by-mail service for new customers and some existing ones by up to 40 percent.

The movie-rental giant began notifying customers of the increases — and some price cuts — early Thursday. The hikes of $2 to $10 will take effect next week and caused an immediate buzz on Internet boards.

The immediate beneficiary of the move was rival Netflix Inc. — its shares jumped more than 9 percent. Blockbuster shares barely budged.

Blockbuster declined to say how many of its 3.1 million online subscribers are facing rate increases.

Spokeswoman Karen Raskopf also declined to disclose which current customers will see price hikes other than saying, "We are taking into account the profitability of individual subscribers."

Blockbuster lost half a million online customers in the July-September quarter. Chief Executive James W. Keyes said last month that many of those subscribers were costing his company more than they were worth.

The company spent heavily to advertise the online service, and it lost money when customers took their movies back to stores for free exchanges.

While Blockbuster was losing online customers over the summer — and said it would stop reporting the number of subscribers — Netflix cut prices and added 286,000 subscribers, pushing it over the 7-million mark.

Netflix pioneered the online ordering and mail delivery of rental movies in 1999. Blockbuster followed in 2004, and cut into Netflix's lead during late 2006 and early 2007.

Blockbuster offers several plans for subscribers who order movies online and receive them in the mail. The most popular plan lets customers keep three DVDs at any time and exchange up to five DVDs per month at a local Blockbuster store for a free rental.

That plan will rise from $17.99 to $19.99 per month for new customers and some existing ones beginning Dec. 27, the company said.

The top-of-the-line plan, in which customers can keep three DVDs out and get unlimited free in-store exchanges, will go from $24.99 to $34.99 per month, a 40 percent increase.

A 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.

Spokeswoman Raskopf called the plans "a really good value for consumers" that must be balanced against "providing a fair return to Blockbuster." She said the Dallas company hopes the increases won't cause existing subscribers to quit.

"This is not a plan to drive people away," she said. "We want to keep them all."

A spokesman for Netflix said the Los Gatos, Calif.-based company doesn't plan to change its standard pricing but continues to test different rates.

"The greatest convenience, selection and value continues to be with Netflix," said the spokesman, Steve Swasey.

Blockbuster shares rose 5 cents, to $3.55, in trading Thursday, while Netflix shares gained $2.37, or 9.5 percent, to $27.24.

source

My charge goes up I may be jumping to Netflix too.

Quote:

Spokeswoman Karen Raskopf also declined to disclose which current customers will see price hikes other than saying, "We are taking into account the profitability of individual subscribers."

So those who watch a lot of movies are going to suffer.
21 Dec 2007, 09:05 AM
George

Isn't their stock something like under 3 dollars a share now? These guys tried too hard to beat Netflix at their own game and they're going to go under within 2 years because of it.

EDIT: I read the end of the article, which shows their stock price. Carry on.
21 Dec 2007, 09:22 AM
Thief Silver

It's amazing that the company that forced out so many mom and pop rental companies is going down.

And awesome.
21 Dec 2007, 09:55 AM
Port

Old and busted, meet new hotness.
21 Dec 2007, 10:07 AM
GohanX

I think it's funny how the local Blockbuster is pretty much dead now. They blame Netflix, but the truth is it just costs too much to rent from them. The Hollywood Video up the street does good business, and the Movie Gallery (cheapest rentals but good selection) is always packed.
21 Dec 2007, 10:20 AM
Dyne

funny that the article doesn't state Netflix will be raising their prices as well. they claim the envelopes they've been using all this time have to be hand sorted at the PO, thus increasing their postage rates which is complete bs. if there's one thing i know (unfortuately) it's PO regulations (MPDA ceritfied through my job. yay)
21 Dec 2007, 10:27 AM
stormy

Quote:

Originally Posted by Dyne

funny that the article doesn't state Netflix will be raising their prices as well. they claim the envelopes they've been using all this time have to be hand sorted at the PO, thus increasing their postage rates which is complete bs. if there's one thing i know (unfortuately) it's PO regulations (MPDA ceritfied through my job. yay)

it says they're not changing pricing

Quote:

A spokesman for Netflix said the Los Gatos, Calif.-based company doesn't plan to change its standard pricing but continues to test different rates.
21 Dec 2007, 01:16 PM
Schlep

Back when The Darkness came out I wanted to rent instead of buy. You wouldn't believe how many Blockbusters I drove to in the Dallas area that have gone out of business. Then Blockbuster started trying to use online rentals to offset B&M stores taking a shit. They're definitely going the way of CompUSA in the next few years barring some freak chain of events.
21 Dec 2007, 01:19 PM
Cowutopia

good, fuck 'em.
21 Dec 2007, 01:29 PM
Rumpy

Most think Blockbuster has 2 years left, tops. Sounds about right.
21 Dec 2007, 01:35 PM
Dolemite

Yeah, the Blockbusters by me are either pretty dead or closed. Hollywood Video does pretty well, but not as well as they did just a few years ago.

Eventually Netflix, the Internet, and In-Demand will put all retail video rental chains out of business, anyway.
21 Dec 2007, 01:49 PM
Timber

I dropped BB online when my plan went from $17 to $25, there's no way in hell that same service is worth $35 now.

I'm with Netflix now and it is working out just fine for me. I'm on the unlimited 3 out at time plan for $17. The turnaround is great too. I dropped off 2 movies at the post office yesterday and my new movies are shipping today and will be here tomorrow. 3 day turnaround FTW.
21 Dec 2007, 01:53 PM
stormy

The thing is, how can they possibly not be turning a profit? I just don't see it.

Thier inventory costs them about $10 each. I worked in a video store a long time ago when DVDs first came out and our cost was about $13 per dvd. DVDs are way cheaper now, and Blockbuster has rediculous buying power. So they only need to rent a movie out 3 times to make a profit on that inventory, then they sell it used basically for what it cost them in the first place, so they really only need to rent it out maybe once. Everyone working there makes minimum wage, and you don't need all that many people there at one time. Every other item they carry, candy, soda, other crap, is all high margin. HOW DO YOU FUCK THIS UP!?
21 Dec 2007, 03:02 PM
Calliander

Wow, pretty interesting to find this out. Glad I didn't buy any shares of Blockbuster like my old broker advised when they started their online service.
21 Dec 2007, 03:05 PM
YellerDog

It's the circle of life.
21 Dec 2007, 03:28 PM
Dyne

Quote:

Originally Posted by stormy

it says they're not changing pricing

it was on the national news last week.
21 Dec 2007, 03:35 PM
Some Stupid Japanese Name

Quote:

Originally Posted by Timber

I dropped BB online when my plan went from $17 to $25.

Me too. I was the guy they were losing money too. Summer hours at a game store means lots of time to do nothing. I'd get my three movies in the mail, watch them all that day, get three more for free at the store, two days later the next three would show up in the mail. Wash, rinse, repeat.

I was watching around thirty -forty movies a month for $17. Couldn't beat it.
Thankfully, about the same time they raised the price, I ran out of shit to watch, so I just canceled.
21 Dec 2007, 06:08 PM
Rumpy

30-40 movies a month? That's obscene.
21 Dec 2007, 06:10 PM
cigsthecat

I'm on the internet plan and it's better than all this crap.
21 Dec 2007, 08:21 PM
Tones

I hope Blockbuster goes out of business before I have to pay my $5 late fee. I started going to Hollywood Video just so I wouldn't have to pay it.
21 Dec 2007, 09:01 PM
kingoffighters

I haven't rented from BBV since late 90s. Netflix is alot better (even tho they churn their customers).
21 Dec 2007, 09:20 PM
Some Stupid Japanese Name

Quote:

Originally Posted by Rumpy

30-40 movies a month? That's obscene.

I'm a full time employee and single father of two.
I have no life.

I tried netflix a couple of years ago, but canceled when every other movie was too scratched to work.
Apparently they are better than they used to be.
21 Dec 2007, 10:46 PM
Dyne

ive bounced between the two and loved that you had in store rentals with BB. course that all changed when the BB near me closed and Netflix FINALLY got a distro in my city.

the one positive i will say (at least they used to) about BB is that they usually have more than one version of a movie or at the very least the newest one (usually an SE or Directors cut which also usually means a better transfer). Netflix always has just one version.
22 Dec 2007, 03:10 AM
Timber

Quote:

Originally Posted by Some Stupid Japanese Name

I tried netflix a couple of years ago, but canceled when every other movie was too scratched to work.
Apparently they are better than they used to be.

I used Netflix for the first time back in 2002 and I wasn't happy with it at all. Turnaround was between 5-6 days, discs came scratched fairly frequently and the selection wasn't all that great.

Since I went back to them recently all of those things have been improved greatly.
22 Dec 2007, 03:15 AM
MarkRyan

I'll be switching to Netflix. I like that I can bring my DVDs to the local store, but I've done it twice in the past six months I've subscribed, which I could pay for with the savings I'll get from Netflix. But mostly, I'm just irritated that they've raised the price.
22 Dec 2007, 03:32 AM
nixhex311

Quote:

Originally Posted by Rumpy

30-40 movies a month? That's obscene.

That's not that obscene, when I first get netflix I was on the 4 at once plan, and since I got off of work around 2:30pm everyday, I would usually have time to watch a dvd or 2 that my wife didn't want to watch before she got home, I was averaging about 20 a month from that alone. If I had the option to return to a local store I could have easily watched a lot more. I kind of miss that with my current job, I caught up on a ton of old samurai movies & tv shows that I never got around to watching.