December 05, 2006
Blockbuster Inviting Netflix Customers to Rent Movies From Stores for Free
By Bob Caswell
According to the Wall Street Journal (subscription required), Blockbuster is introducing a holiday promotion that will let Netflix subscribers rent Blockbuster movies for free. Here's how it works: Netflix members can turn in the tear-off flaps from any red Netflix envelopes for free rentals at any Blockbuster store. The promotion is set to run through December 21.
Obviously, Blockbuster is using this promotion to boost exposure of its newly released "Total Access" feature, which allows customers to exchange DVDs received through the mail with DVDs available in stores. The rental chain seems willing to try anything to gain customers from Netflix.
Steve Swasey, a spokesman for Netflix, had a curious response: "I think most folks know that if you get something free you're getting what you pay for...The very reason for online DVD rental is that you don't have to go to the store. It's the convenience, selection and value."
While I agree that Netflix users aren't as likely to walk into a rental store, the "get what you pay for" is slightly out of place. It suggests that because the DVD rental from a Blockbuster is free, it's somehow inferior to Blockbuster's regular offering. Are those who pay when walking into a Blockbuster getting more?
The truth is, it has little to do with pay or even convenience at this point. Blockbuster has already copycatted Netflix's model with the added bonus of even more options (pick a store or go online, etc.). But I think even if Blockbuster offered Netflix customers the ability to mail in the tear-off flap for free rentals, the company would still have a hard time getting converts. This whole thing is turning into more of a Coke vs. Pepsi battle with active consumers needing more than a free drink to make the switch from their favorite beverage.
In any event, Blockbuster's move is a bold one, to be sure, but how well will it work? The Netflix crowd seems to be a loyal bunch...
