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The DVD Rental Race Analyzed 306

Posted by Zonk from the netflix-4-eva dept.
Thomas Hawk writes "Netflix and Blockbuster have been locked in a price war with regards to the DVD rental space. Wedbush Morgan Equity Analyst Michael Pachter has a $3 dollar price target on Netflix and is in contrast bullish on Blockbuster. Davis Freeberg challenges Pachter's thinking that Netflix will be the loser in the DVD rental battle and Pachter himself responds back on his rationale on why he thinks Blockbuster has the advantage." From the article: "Irrespective of what Pachter thinks about the overall DVD rental business, Pachter's seemingly obvious prediction would appear pretty dire for Netflix. Pacther updated his price target for Netflix On 4/22/05 with the new $3 price. If Pachter is right, then we should expect to see Netflix's stock fall by approximately 75% over the next 12 months."
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The DVD Rental Race Analyzed More

The DVD Rental Race Analyzed

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  • I'm no market analyst, just a movie watcher... (Score:3, Insightful)

    by garcia ( 6573 ) * on Friday April 29, 2005 @03:42PM (#12386932)
    If you know someone who is using Netflix right now ask them about the service? Do they like it?

    I don't know a single person that uses Netflix so that's rather difficult. I also haven't heard it *anywhere* other than on Slashdot. I wouldn't even know it existed otherwise.

    Now go into your local Blockbuster Video store and ask the clerk there how he feels about his employer.

    I have a feeling that they will have no comment... We all know what happens when you bite the hand that feeds you.

    Netflix's customers are huge evangelists for the service and they view the service as fun, innovative and exciting -- not bad for a growing company with very little debt.

    This guy is probably a customer for this young and new company w/o many subscribers (compared to Blockbuster). I really can't speak either way about it though as I have never used them myself.

    Blockbuster on the other hand is a bloated company, with tons of debt, who is laying off it's employees, cutting back their hours, fending off a shareholder proxy fight with Carl Icahn, who has had their CEO recently announce that if he was not re-elected he would resign from the company.

    Ok, yeah, it's bloated - along with plenty of other companies out there. I am not fan of Blockbuster and their tactics which include blatant lying to their customers and potential customers about their "no late fees" crap.

    Cutting back hours? I don't know about that. I know of a couple Blockbusters around here and they are open the same hours they have been for years. At least you know that the movie rental places are open on Thanksgiving and Christmas.

    In the long run, all three companies, Netflix, Movie Gallery and Blockbuster will face a tremendous battle to stay alive when Video on Demand becomes widely available, but in the short run, if you agree with Pachter, then you should short Netflix and use the proceeds to buy Blockbuster and Movie Gallery.

    I'm not holding my breath for VoD, really, I'm not. Even if/when it does become "viable" I have a feeling it will continue to be expensive and a little bit behind the DVD release dates. I really don't see any advantage to VoD but then again I have ~6 different movie rental places within 5 miles of me. YMMV.

    I realize that I am a bit different than most people when it comes to renting DVDs. I'd prefer to buy them. Target has great deals on movies (i.e. Pulp Fiction with extended crap for $10 and many random titles for $7.50). I spend a lot of time looking through the $5 bins at Walmart for movies. I also buy previously rented DVDs which are usually 3 or 4 for $20. I don't frequent Blockbuster as I always feel uncomfortable in their store. I prefer Hollywood Video because of their random titles that are $1 back if you return the movie within 24 hours.

    So I really don't care if Blockbuster or Netflix do well or not but I certainly don't believe for a second that the sudden downfall of the rental business will come from VoD. Then again I'm not a market "analyst" blogging away about stock prices... I'm just a movie watcher that doesn't like to pay a whole hell of a lot to watch a movie once.
    • I don't know a single person that uses Netflix so that's rather difficult. I also haven't heard it *anywhere* other than on Slashdot. I wouldn't even know it existed otherwise.

      They have 1.5 million customers. Clearly somebody is using it. In our little corp headquarters office or 25 people I can think of 4 people who use it (myself included) and the other 3 are definitely not in the Slashdot demographic.
      • They have 1.5 million customers.

        They have 3 million [marketwatch.com] subscribers, not 1.5 million (I hate to link to such a dire-sounding headline, but the article does have a lot of hard info). And their subscriber base is growing rapidly.

        Every day at my office you can see a bunch of those red envelopes in the office inbox. And a lot of us that subscribe get them at home, so clearly there are more where I work than I even know about.

        This is a popular service and one that people really like. One of the first things I learned when picking stocks is that the bottom line is the product has to be something people want. The quick test of any stock is to look around at what people are saying about the company, not from a business perspective but as customers. I have honestly heard the words "I love Netflix" more times in one week than I've probably heard the words "I love Blockbuster" in my entire life.

        That doesn't mean the company's on the road to success, but it does mean they have the basic building blocks right. Blockbuster's really got nowhere to go but down at this point.
      • They have 1.5 million customers.

        Um, over 3 million, actually. :)

      • Re:I'm no market analyst, just a movie watcher... (Score:4, Insightful)

        by Surt ( 22457 ) on Friday April 29, 2005 @04:35PM (#12387490) Homepage Journal
        1.5 million customers + 4 in your office of 25 people => skewed sample.

        If one in 6 working age americans used netflix that would be a customer base more like 30 million.
    • I am not fan of Blockbuster and their tactics which include blatant lying to their customers and potential customers about their "no late fees" crap.

      I haven't entirely figured out why people got so worked up over this. As soon as they introduced the new policy, I went up to the counter and asked "So, what does this mean?" I got back the straight answer that it gives you up to two extra weeks to return your videos. I didn't even have to ask them to elaborate on what happens after that. It's just like the l
    • My aunt and uncle use Netflix, and enjoy it. I know a number of other people who like it.
      I worked at Blockbuster, and even while I was there, everyone hated working there. I suppose its better than fast food, but the pay sucks and so do the customers.

      In the words of Randal Graves, "This job would be perfect, if not for the customers."

      • Yeah I worked there too (Score:5, Informative)

        by CiXeL ( 56313 ) on Friday April 29, 2005 @04:41PM (#12387567) Homepage
        store #06516 hermosa beach,ca back in '97

        and yes it really REALLY sucked working there. The number one thing i couldnt figure out was why they would try to sell all that movie merchandising crap but it was a loss every damn month when they would put it at 99 cents clearance just to get rid of it piling up. also i hated how they would have us specifically mislead the customers for their rewards cards and return times.
    • In Denver, I know of six families that are loyal watchers. I family has a geek in it, but he did not buy into netflix (his wife did).

      In pheonix, my little sister does netflix (very much not a geek).

      I do not use it, but I also do not use any rental agency (buy the dvd, comcast, and movie in those order).
    • If you know someone who is using Netflix right now ask them about the service? Do they like it?

      Almost everyone I know uses it exclusively, and likes it very much. They epecially like the variety they'd never be able to get from B'buster or Walmart.

      I don't know a single person that uses Netflix so that's rather difficult. I also haven't heard it *anywhere* other than on Slashdot. I wouldn't even know it existed otherwise.

      Did someone pay you to write this, or have you been living under a rock? (Or bot
    • I never would have gotten NetFlix, but my wife did. For a couple of months I ignored it, didn't even give it a second thought, except for the $17 per month.

      Then it hooked me like a crackrock in Compton.

      I love it. I think it's right up there with Google (a few years back), Craigslist and eBaY--almost right up there with coffee and beer!

    • " I also haven't heard it *anywhere* other than on Slashdot. I wouldn't even know it existed otherwise."

      Not sure about where you live, but here on the Central Coast of California, we're getting commercials for Netflix on TV. Also, BestBuy has given me fliers for it before.
    • I really like the service from Netflix. They are also the first to do it and they do it well. I have the three at any given time plan and my cycle time is 5-6 days (assuming two day delivery to me, two day delivery to them, one day viewing, and one day delay on their part)

      Even when they were a couple of bucks higher then blockbuster - i stayed loyal because they were the innovaters and still offered me great service.

    • Re:I'm no market analyst, just a movie watcher... (Score:5, Insightful)

      by jp10558 ( 748604 ) on Friday April 29, 2005 @04:19PM (#12387322)
      I've used netflix quite a bit (in fact every time I have a full time job - currently in college though). Their prices aren't bad - especially given where I live there is no cable anyway.

      So, for the price of basic cable I can get DVDs right to my doorstep, usually with no more than a day lag time. I can hold on to those movies, with no penalties. They have a selection that puts the "local" (30 mile one way trip) blockbuster to shame.

      I think services like NetFilx will be able to find a niche if they want to - specifically with rural america (which is pretty big IIRC from the last election etc...).

      With gas costs rising, do you want to drive 20+ miles to get to blockbuster, and then drive back, and then be locked into driving them back within a week (or 2 now?) or else fees? Gas is somewhere around $2.20 a gallon most places in the US.

      I think the average gas mileage is 25MPG or so. So figure on average 3 gallons per trip out to blockbuster for many rural americans. That's 6 gallons once you return the movie. So, it cost you around $13 just for travel, not counting wear and tear on the vehicle or time. That one trip to blockbuster just about paid for a standard NetFlix monthly package, before you rent one video. And this assumes your time is worthless.

      Of course, we try to make our blockbuster trip coincide with other shopping and such, but that's not always feasible, though the new extended time (I think, I haven't really looked at whatever the "end of late fees" became) it's a lot easier compared to the 2 day turn around time on new releases previously.

      With more TV shows coming out on DVD a year later, and with our situation in the country, when the analog TV goes dark, we'll just up our NetFlix subscription. Better quality, better choice(4 analog tv stations on a good day), and no commercials.

      So, I think NetFlix can do very well if they don't mind catering to the rural market.
    • I don't know a single person that uses Netflix so that's rather difficult. I also haven't heard it *anywhere* other than on Slashdot. I wouldn't even know it existed otherwise.

      You just might if you ever shopped at BestBuy or bought a DVD player there.

      A mental excersize - do you think more than a few people just might be buying DVD players at Best Buy?

    • When I was living in southern california tons of people both my girlfriend and i knew were using netflix. Now that we've moved to miami there are alot less people here who use it. Of course I saw more netflix commercials in LA than i do here.
    • I don't know a single person that uses Netflix so that's rather difficult. I also haven't heard it *anywhere* other than on Slashdot. I wouldn't even know it existed otherwise.

      I know exactly one person who uses netflix and he loves it. He was using it 5 years ago.

      Cutting back hours? I don't know about that. I know of a couple Blockbusters around here and they are open the same hours they have been for years. At least you know that the movie rental places are open on Thanksgiving and Christmas.

      I don't
    • VoD is dead in the water as implemented by the cable companies. It's a train wreck that has already happened.

      I have Time-Warner. Their advertising slogan is 'watch it when you want'. It should be 'watch it when our server isn't completely overbooked'. Pause the movie and you loose the connection. We lost 'AVP' 10 minutes from the end and couldn't finish watching it till the next day.

      I'd much rather have the DVD.

  • Netflix needs to be acquired (Score:4, Insightful)

    by winkydink ( 650484 ) * <sv.dude@gmail.com> on Friday April 29, 2005 @03:45PM (#12386967) Homepage Journal
    It's pretty clear that Blockbuster has the size, relationahsips, channel, and most importantly, money to crush Netflix. Each day that passes is, in reality another day that the value of the company decreases. Rather than "talking with Amazon" or thinking they can get a bazillion dollar deal, Netflix should get off their collective butts and start shopping around.

    Who would buy them? Well Walmart is an obvious choice. The current offerring sucks. Barnes & Noble? Target? I'm sure there are others, these are the only ones that immediately jump to mind.
    • It's pretty clear that Blockbuster has the size, relationahsips, channel, and most importantly, money to crush Netflix. Each day that passes is, in reality another day that the value of the company decreases.

      They also have a lot of expensive real estate, payroll, and other costs associated with retail locations, which are becoming less and less relevent. Even if Blockbuster starts to dominate the mail order rental space, they're still saddled with the retail ball and chain -- which Netflix, etc., don't h
      • Real estate are typically leases in commercial retail space which can be sublet. Payroll I'll grant you, but the average wage has be close to minimums for retail store employees (the bulk of the company).

        Brick and mortar isn't going away any time soon. There's a lot more to the "shopping experience" than just driving to the store to buy something. Heck, my wife (and many others) can tell you that.
        • Oh, there's tons more to the shopping experience than just driving down and renting a video. But on the other hand, who would sign up for a shopping experience that involves driving down and discovering that the selection is total ass?

          Compare shopping for that really good movie at Blockbuster to shopping for that really good movie on Netflix.
    • It's pretty clear that Blockbuster has the size, relationahsips, channel, and most importantly, money to crush Netflix.
      But not the catalog.

    • Re:Netflix needs to be acquired (Score:5, Insightful)

      by shayne321 ( 106803 ) on Friday April 29, 2005 @04:02PM (#12387164) Homepage Journal

      Netflix should get off their collective butts and start shopping around.

      I keep reading people saying this, but my question is: Why? Every interview I read with the founder of Netflix says he's having a ball running the company as is, they're moderately successful, profitable (how many startups can you say THAT about?), and have a strong brand.

      What would the deep pockets of wal-mart, amazon, or blockbuster give them? It's not like there's a lot of room for innovation in the online rental market. I go to the site and request a disc, they mail it to me, I mail it back. What sort of value added service are they going to provide, offer to mail me popcorn with my disc? Thanks but no thanks.

      I think Netflix has a good thing going, and the founder has said repeatedly he is not going to get into a price war with blockbuster, he is going to compete on service.

      Granted I'd love to see netflix do away with throttling [dirtynerdluv.org], but for my $18/month I'm happy.

      • Why? Every interview I read with the founder of Netflix says he's having a ball running the company as is, they're moderately successful, profitable (how many startups can you say THAT about?), and have a strong brand.

        All beside the point. Netflix isn't a mom-and-pop business that can stay open and independent as long as they have money coming in. They're a publically held company whose management holds their jobs at the pleasure of investors. None of those investors have seen any serious returns on the

    • Re:Netflix needs to be acquired (Score:5, Insightful)

      by Morinaga ( 857587 ) on Friday April 29, 2005 @04:10PM (#12387240)
      Blockbuster has the size, marketing and money to TRY and crush Netflix. However, they also have overhead, tons and tons of overhead. Retail consumer locations cost money but nothing in comparison to the empolyment costs of having people in those buildings. When you run a company that floats a margin above large amounts of overhead your company's profit margins look like the DOW with very high Highs and very low Lows. Overhead produces the types of losses you see from Airlines and car manufacturers. They have fixed costs in this massive retail chain that don't change without significant closings, firings etc...

      Netflix on the other hand has a much more flexible overhead structure. They have fewer customers? Well first, they KNOW how many fewer they have because they have subscribers and a predictable cash flow regardless of customer usage unlike Blockbuster. Second, if they get fewer customers they spend less on postage. Perhaps they reduce purchasing on new titles. At worst perhaps they lay off employees.

      Netflix is a remarkably proficient business model. The biggest issue is that since they went Public in '02 they have become part of the beast that is stakeholder appeasement. They are a 'growth' stock. Shareholders want growth so a company has to invest in infrastructure, marketing, promotions and everything under the sun to show revenue growth. It frankly doesn't matter if the growth is done smartly as long as it's not slowly. The board of directors gets pressue for stock growth, which bears pressure on the CEO for that same growth (who is beholden to their own income (ie options) to show growth). The days of developing a solid income stock company are dead. Profits be damned if revenues grow by 19.5%!! Who cares if you lost 100 million in a quarter. Anyway, that's all a tangent rant but suffice to say that because Amazon posted losses during their growth years doesn't mean the business model won't work. It also doesn't mean there's no place in the market for retail when a web service is available.

    • I've had Netflix for a couple of years, and decided to try BB for a couple of months, and switch if it were 'better'. Netflix is better on turnaround time, selection, availability.

      Blockbuster is better on price, and 2 free instore rentals per month.

      I'm dropping Blockbuster.

      I went to cancel BB once already, and they acknowledged the poor selection and availability. They gave me a free month. Still going to cancel at the end of the free.

  • The Other Kind of DVD Rental Race (Score:5, Interesting)

    by Doug Dante ( 22218 ) on Friday April 29, 2005 @03:46PM (#12386976)
    I get DVDs back from Netflix in about 48 hours. The US Postal Service gets my videos to Netflix in 24, they ship the same day, and I get them back the next day. It doesn't happen all of the time, but it's pretty impressive when I'm about 100 miles from my local Netflix processing center.

    I wonder how quickly Blockbuster returns videos for what percentage of the population as compared to Netflix?

    • Netflix has MANY more distribution centers around the country then either Netflix or Blockbuster. The only time I don't get a 48 turn around (from when I drop my last movies in the mailbox to when I get my new movies) is when I've dropped them in the mail on Monday (they seem to be overloaded on Monday and get a LOT more back then so its a day slower).

      Lackluster video has only a handful of distribution centers. The same is true of Walmart and others.
    • Netflix has it down, if I time it right I can get a new movie almost every day. Sunday is my day to catch up if I need to. That sort of reliable, continuious service is hard to come by. They better not go out of business, I have 255 movies in my queue, thats a lot of movies to move over to another system.
      Yeah, I'm adicted, so?

    • Re:The Other Kind of DVD Rental Race (Score:5, Informative)

      by jfengel ( 409917 ) on Friday April 29, 2005 @04:03PM (#12387172) Homepage Journal
      Of course that has more to do with the post office than with Netflix or Blockbuster. I use Netflix, and they generally put a movie out in the afternoon mail if they get it in the morning mail. That's about as fast as one can ask.

      I assume that Blockbuster is the same way. If not, then they're in serious trouble. I'm not going to say it's easy to achieve on a large scale, but they'd better not be any slower and I bet they can't be any faster.

      I don't usually get 48 hour return time, even thoug my local distributor is only an hour's drive from here. But that's mostly the post office adding an extra travel day on one end or the other.

      One could choose to alter their model to allow even faster service; say, the ability to request that a movie be sent when you put it in the mail, rather than when they get it, and trust you to be honest (and drop you if you're not). But that would involve them letting out more movies at once, which would cost them more.

      Blockbuster could add service whereby you could exchange either by mail or at their place. That might work well for them, since it would mean that they could batch up returns. Mailing costs have got to be a huge chunk of Netflix's cost, since those recipient-pays envelopes have a significant surcharge. A big box of returns would cost only a few dollars. But that would mean making more copies available at the individual stores...
      • I used to live in San Francisco, near wher Netflix started, and the service was great, one day turnaround time. Now I live in Albuquerque and the service is not so great. Not only does it take a week to get our movies, they have lost three movies in the six months we have been here.
      • Blockbuster has a deal with the USPS. When the video is put in the mail to be returned, it is scanned at the post office. This alerts Blockbuster that the movie is on its way back, and they ship the next movie in the queue.
    • Blockbuster has a 2-day turnaround for me...although I live just outside the DC metro area and the distro center is only about 40 miles away.

      Last month I went through 15 movies, which could've cost me $45-60 to rent locally (assuming I could even find that many movies worth watching amidst the rows upon rows of garbage), but instead was only $15.

      I used to split Netflix with my roommates in school...but I have to say I went with BB on my own because of the price and the two free movie/game local rental cou
    • I've used both, and Blockbuster seems about the same to me. Of course, Houston probably has its own distribution center, so that may be part of it.

      I was talking to an employee at the Blockbuster store by our house (when we were using one of our 2 free monthly in-store rentals, which are handy when you want something on a whim) says they're in talks with the USPS to have them scan the returning DVD's when they receive them, so that they can send outgoing ones before the returning ones even arrive at the dis
      • ...they're in talks with the USPS to have them scan the returning DVD's when they receive them, so that they can send outgoing ones before the returning ones even arrive at the distribution center.

        That's an interesting idea, but Netflix could pretty easily match it if they go forward with the plan - just let consumers indicate when they've dropped the disc in the mail and send off another right then.

        They already do something simialr if you report a disc damaged or incorrect, they mail off another right a
    • Mine is similar and I live about 250 miles from minneapolis.

      I get the 5 at a time deal and average about 5 movies per week
    • I live in Northwest Indiana, about 25 miles from Chicago. Netflix has a one to two day turnaround to and from their distribution center in Chicago (I put something in the mail and usually get new movies two days later). Blockbuster also has a center in Chicago. Turnaround from Blockbuster is usually five business days. I also have a subscription to Wantedlist (porno-netflix), which has a distribution center in California. Turnaround from wantedlist is usually 5 - 7 business days. I've actually had Wantedlis

  • Netflix (Score:2, Insightful)

    by mrbaggs ( 864520 )
    Speaking as a longtime user of Netflix I think they will be around for a while given their excellent service and selection.
    • ...I think they will be around for a while given their excellent ... selection.
      I'm a new Netflix user. I've got a 24 hour Blockbuster a mile from home - they always have a copy of the latest Hollywood drek du jour. But that's not what I want to watch. IMHO, Netflix will always have a market as long as enough people want to watch quality film, not just star-packed rehashes and smarm, or gratuitous eardrum-bursting explosions.

    • Re:Netflix (Score:2, Interesting)

      by MyTwoCentsWorth ( 593731 )
      Speaking as a long time user on Netflix, I think they will go bankrupt in a few years.

      I have been one of their early customers and I must be responsible for at least 7 or 8 other Netflix accounts being open.

      I agree they have excellent selection. Service, on the other hand... what are you smoking ?

      I am a high-turnover user. I have been born and raised in a former communist country and only came here some years ago, so I have never had the opportunity to see almost any good movie until I moved to the US

  • Well, reading TFA, it would seem that video on demand from cable is in this race, and looks to be the odds on winner...

    Comcast being better than a rental company sounds oxymoronic, but its possible. I somehow think there will be more wrinkles in the plot before this falls out to a two horse race.

    • Re:hmmmmm (Score:4, Insightful)

      by winkydink ( 650484 ) * <sv.dude@gmail.com> on Friday April 29, 2005 @03:51PM (#12387046) Homepage Journal
      Well, reading TFA, it would seem that video on demand from cable is in this race, and looks to be the odds on winner...

      Really? Do you think you'll be able to watch the movie as many times as you want in a given period for a fixed fee? Can you "lend" your copy to a friend? I'm also pretty sure that they will devise some way to "force" you to watch advertising (granted, DVDs do this too, but it appears that may be changing based on recent proposed legislation).

      I'm sorry, but I believe that saying Video on Demand will replace DVDs is a lot like saying eBooks will replace paper (and I'm a big eBook proponent).
      • Tivo and Netflix have agreed to somehow produce movies on demand...I don't understand why you think that idea is rediculous, not only does it save Netflix expenses (they dont have to ship or store physical media), but the consumer gets an instant product. The only technical hurtles I see are the copyright issues and the bandwidth. Since Concast started offering OnDemand, I use it at least once a week, they are a decent selection of free stuff.
    • Comcast being better than a rental company sounds oxymoronic, but its possible. I somehow think there will be more wrinkles in the plot before this falls out to a two horse race

      I will always continue to rent. I will never pay to stream. There are a few reasons why. If I rent, I can watch anytime, pause, stop, come back the next day if I want. If the movie is really good, I can watch it a second time for free. I physically have the media in my hand.

      If it streams, how long can I pause it for? What if I f

    • Video on demand has a long way to go. On Comcast, they didn't offer true Widescreen VOD last time I checked. And the quality is much worse on a Widescreen HDTV. And the selection is not even close to what you can get from Netflix.

      VOD is only for the average Joe that watches Hollywood blockbusters and mainstream movies on a 31 inch 4:3 format TV.
    • Well, reading TFA, it would seem that video on demand from cable is in this race, and looks to be the odds on winner...

      I would say that video on demand would be the winner if anyone but cable companies were feeding it up.

      The great thing about a DVD is that you can watch it in a lot of places. Cable Video On Demand is carefully protected so you can only watch it in a few. And DVD's are generally a little more random access with more features than any video on demand I've seen.

      I agree video on demand wi

  • Investment Rule (Score:4, Insightful)

    by stecoop ( 759508 ) * on Friday April 29, 2005 @03:47PM (#12386995) Journal
    7.5% of Netflix is currently owned by Netflix Co-Founder and CEO Reed Hastings. Given that Netflix stock has already fallen by 60% over the last 12 month and that their stock is currently one of the largest short postions on Wall Street, a $3 price target seems a little aggressive .

    Second rule in investment is never say a stock can go no lower. The trip to zero is a hard fall at any price.

    First rule, you probably are wondering, is: buy low and sell high.
    • The trip to zero is a hard fall at any price.

      Stock never actually hits zero. 1/128th of a cent, yes. But never zero. (And yes, I do remember a company trading for about that price at one point)

  • adult (Score:5, Interesting)

    by blackmonday ( 607916 ) on Friday April 29, 2005 @03:49PM (#12387014) Homepage
    I can't believe neither service rents porn movies. I think it would boost service considerably. Just keep it on the down-low. Hide it under "romance".

    • Re:adult (Score:4, Informative)

      by mmkkbb ( 816035 ) on Friday April 29, 2005 @03:57PM (#12387112) Homepage Journal
      greencine.com offers adult movies and a more eclectic selection than either. however their service is slower and their prices are higher.
    • dvdbarn / intelliflix has them too. there are also porn-only services with a presumably wider selection, but they charge a premium.

    • Re:adult (Score:2, Informative)

      by Lando Griffin ( 698606 )
      Try Greencine http://www.greencine.com/ [greencine.com]! They have all the Hollywood releases and a ton of stuff the average Slashdotter would be interested in--anime, classic horror, non-animated Asian stuff, and even pr0n. I've been a member for almost two years and their service is great.
    • Netflix use to have pr0n but they stopped carrying it for some reason.

    • illegal in some places (Score:4, Informative)

      by John Seminal ( 698722 ) on Friday April 29, 2005 @04:10PM (#12387239) Journal
      if a dvd mail rental place exists in SF for example, how will they know it is illegal to rent porn in a specific county in Georgia, that it violates community standards?
    • I can't believe neither service rents porn movies.

      Porn is the cash cow of the video rental industry. While it might take up 10% of the floor space it makes more than half the profit.

      Forget Blockbuster renting porn. IMO it won't happen unless they get bought out. Rumor has it the Mormon church owns a chunk of them but I have no idea if that's true or not.

      As for Netflix though I could see them moving into it if things get difficult. Think of it as their "nuclear option". While they'll catch crap from

  • One important thing Michael Pachter is missing (Score:5, Insightful)

    by Emperor Shaddam IV ( 199709 ) on Friday April 29, 2005 @03:49PM (#12387020) Journal
    Is the fact that Blockbuster's previous practices of changing late fee's that were outlandish, has pissed a ton of people off. Also, Blockbuster used to not carry a lot of movies because they were too of the wall or "racy" or "sexually" oriented.

    Blockbuster pissed me off so bad in the 1990's I haven't rented from them in several years, nor would I even consider renting from them if they charged less than half what Netflix did.

    Check out the other people they pissed off:
    http://www.google.com/search?hl=en&q=blockbuster+s ucks [google.com]
    • It's interesting to note that in the switch over to their "No late fees" program, Blockbuster is now managing to annoy people who return on time in addition to those who return their rentals late.

      It's obvious that the late return customers will get upset at the idea of being charged the full replacement price of a movie after seven days after the due date, but the extended return grace period has a bigger effect in that people are keeping titles out longer.

      I'm currently on the "movie pass" program which a
  • I come from a country (in south Asia) where they have anti-piracy laws but nobody abides by them because of the slack law enforcement. Piracy is so prevalent that if anybody buys digital content by paying money they would be considered fools. So the few sites that sell digital content target fellow countrymen settled in Europe or America. Now a handful of websites sell subscription which allows me to access latest movies. I pay about $15 for access to the latest movies which are streamed to me. Please note

  • War of attrition (Score:5, Interesting)

    by C_Kode ( 102755 ) on Friday April 29, 2005 @03:50PM (#12387023) Journal
    A war of attrition (price wars) are a top cause of business failures. Read any guide to the top reasons businesses fail. A war of attrition will be listed.

    Blockbuster is a fat cow. Netflix will die by the very sword they have drawn.

    Offer what the others don't, and offer it at a good price. It doesn't have to be the lowest. I buy from NewEgg not because they have the best price, but because I get what I ask for and they are quick to fix it if I don't.
    • did you see the size of Blockbuster's debts??? the moment they fail to service the debt the vultures will call them in... bye-bye... Blockbuster cannot cut their prices too low for too long just to eliminate Netflix... they run the very severe danger of slashing their own lifeblood... cashflow to service the debt...
      • the vultures will call them in... bye-bye...

        And not a moment too soon. At their stores I've been to their selection sucks and service is worse. There was once almost a riot when the line went to the back of the store and the manager didn't put more people on the registers.

        An example about their selection - a friend once tried to rent some movie and was told they didn't stock it because it had a black/white love scene. And it's not like we're in the Bible Belt, either - this was on the Upper West Side i

    • As someone who went to Dell to save $40 but now has spent the past three hours on the phone trying to return a damaged product, I completely agree with you. Service still counts, and even if Netflix (or GreenCine) is a bit more expensive, if the service is better, people will buy your product. That applies to almost any business. As much as things have become commodities, there is always going to be a niche for someone who does things well. That's not Blockbuster.
    • Offer what the others don't, and offer it at a good price. It doesn't have to be the lowest.

      Tell me about it. Whatever happened to the 8-out at a time for $40 plan? That is ideal for my summer vacations - I hate watching TV, but boy can I burn through a season of Deep Space 9 or Sex and the City in a couple of days. Now the best they can do is 3-out at a time, but it's not quite enough to meet my needs as well as the rest of my family who wants to rent actual movies.

      I can't wait until they have a legal t

  • no no no.... (Score:5, Funny)

    by rayde ( 738949 ) on Friday April 29, 2005 @03:53PM (#12387059) Homepage
    every smart investor knows to skip these guys and just invest in the DVD+/-R manufacturing sector.

    ;-)

  • As a user for the last 6 months, it's been great. Great service.

  • Financial analysts (Score:5, Insightful)

    by Petronius ( 515525 ) on Friday April 29, 2005 @03:55PM (#12387086)
    These are the same people that predicted that Enron and Worldcom were the companies of the future, that Lucent was going to grow forever, that QQQ was the ticket to retiring at 30. Who gives a shit about their opinion? Listen to successful investors: W. Buffett, Peter Lynch, they'll tell you that the best thing to do about analysts is to ignore their predictions. So what does this guy know about Netflix? Has he actually even tried their service?

    • Beating the Street, a good read (Score:5, Informative)

      by John Seminal ( 698722 ) on Friday April 29, 2005 @04:04PM (#12387179) Journal
      These are the same people that predicted that Enron and Worldcom were the companies of the future, that Lucent was going to grow forever, that QQQ was the ticket to retiring at 30. Who gives a shit about their opinion? Listen to successful investors: W. Buffett, Peter Lynch, they'll tell you that the best thing to do about analysts is to ignore their predictions. So what does this guy know about Netflix? Has he actually even tried their service?

      I took Peter Lynchs advice as the best. His whole opinion of stocks boils down to one question: "Do I like their product, their service, the way they treat me", "Will I be buying from them again, and like it", "Will other people like them". He says, if you anwser yes to these questions, chances are you have a good company. Lynch said the best companies he invested in, the big ten-bangers, were companies he really liked, or noticed other people liked.

      People can read all about P/E ratio, how fast a company is growing, and the rest. But this will not tell you who will suceed. These numbers should just tell you if there is a red flag, if a company could collapse on itself.

      It all boils down to a good product. Price is very important, but if someone sells you crap, or bad service, people will not buy from them, and their buisness is doomed.

      • Peter Lynch was not interested in what HE liked personally, he was interested in what people in general liked. That's why he invested in barbers who did a bad job of cutting his hair. (but only after a lot of thinking) That's why his favorite strategy was take his daughters to the mall. When his daughters bypassed GAP completely one day he knew in advance GAP was going to have a bad quarter.

        Both studied those financial reports in depth. They both made sure the management was good. However before a

  • In my experience (Score:5, Interesting)

    by Anita Coney ( 648748 ) on Friday April 29, 2005 @03:59PM (#12387127) Homepage
    Blockbuster is a joke. An extremely bad joke. Netflix gives me a three day turn around, e.g., I mail on Monday, they receive it and mail a new one on Tuesday, then I get it on Wednesday.

    Compare that to Blockbuster that gave me about a 18 day turn around. About 9 days to get my returned DVDs. About 9 days to get new ones back. It was ludicrous! Here's an even better example: Two months after quitting I get an email saying they finally received one of the DVDs I had sent out OVER two months prior!

    Blockbuster is SO bad I seriously think it's a ploy to make internet/DVD rental services look back to protect their brick and mortar stores.

    • Re:In my experience (Score:3, Informative)

      by calibanDNS ( 32250 )
      I'd just like to chime in and say that I don't think that your experience with Blockbuster Online is universal. I've had really great turn around times with their service (3 - 4 days) and I also enjoy the 2 in-store rentals per month that are included with my online subscription. With those coupons, if there's a movie that I want to have immediately, I can drive to my local Blockbuster and pick it up. If I get to the end of the month and haven't used the coupons yet, I tend to go in and pick up a random

  • And the winner is... THE CUSTOMER! (Score:5, Funny)

    by dpbsmith ( 263124 ) on Friday April 29, 2005 @04:03PM (#12387169) Homepage
    Yes, indeed, vibrant competition, the miracle of the marketplace, and Adam Smith's "invisible hand" ensure that by golly, no matter what happens, the customer will always win.

    The only reason Blockbuster ever used to charge those late fees is because, gosh, it's what customers wanted. And now that customers want something different, Blockbuster is responding to demand.

    You can look forward to a ever-brighter future of more and more choice, lower prices, and, of course, better movies.

    Because... everything is for the best in this best of all possible worlds.

  • As a Netflix customer I've noticed a steady decline in the quality of service. Lost disks, wrong disks, longer waits, etc. Maybe they're cutting costs or maybe my postman is a film nut.

    I too hate BlockBuster, got burned to the tune of $40 after retuning a video to the wrong blockbuster, so the main reason I'm sticking with Netflix is for fear of the dark side. I don't think Blockbuster can compete with Video On Demand in the future, the doubters sound like long distance phone companies about five yea
    • As a Netflix customer I've noticed a steady decline in the quality of service. Lost disks, wrong disks, longer waits, etc. Maybe they're cutting costs or maybe my postman is a film nut.

      Anecdotes are useless to judge service. But I'll give one anyway ;). They've never lost a disc. They've never sent me a wrong disc. I've rented well over 300 DVDs and have only 1 scratched disc. They're service slowed a little last month, for about two weeks, but it sped right back up to the typical turnaround (return on Mon

      • "Anecdotes are useless to judge service."
        Yeah, you're right, we should just rely on the obviously accurate marketing materials and press releases put out by the company. I mean, I don't know how I'd live without my copy of Duke Nuke'm Forever and New Coke.
  • Blockbuster doesn't understand where their competitive advantage lies (or, maybe they do, but can't use it for some reason). I got their little flyer in the mail the other day. Two options: Netflix-like rentals, or one at a time, unlimited, from the store. But I can't have both. I'm forced to choose between selection and convenience, and right now, Netflix has a better selection and better customer service. If I could combine the two Blockbuster offerings, I'd probably switch, because even though I us

  • DVD Evangelism (Score:4, Insightful)

    by brontus3927 ( 865730 ) <edwardra3@gma[ ]com ['il.' in gap]> on Friday April 29, 2005 @04:06PM (#12387201) Homepage Journal
    I have to agree with Freeberg. Short of changing their corporate direction like NetZero (not that it hasn't worked for NetZero, emphasising the low-cost pay service over the ad-based free service), NetFlix is always going to have high popular opinion. NetFlix customers are very similar to Apple customers in that regard. They see themselves in a good vs evil fight with a giant corporation (Blockbuster for NetFlix, Microsoft for Apple). Netflix customers are fighting the good fight. Despite this, everyone thinks in the Microsoft business model of "there can only be one company in a given market" Two (or more, and more is better) companies can peacefully co-exist in teh same market. I use Netflix. My sister uses Walmart's service. My neighbor stopes at Blockbuster on the way home from work to rent DVD's because their an impulse item for him. To each their own. I don't see any of the services as inherently better or worse than the other.
  • I *wish* netflix was available here, the way things are going we might end up getting only Blockbuster which, for more 'niche' movies, is really not very good :(

    • Re:what about Canada? (Score:2, Informative)

      by abucior ( 306728 )
      There's plenty of options already in Canada to get a similar service. How about zip.ca? or vhqonline.ca? I've been with Zip for half a year now and I love it. As much as I'd love to see Netflix start up in Canada, it's not like we're totally deprived without it. Zip.ca's selection is pretty massive. Turnaround times aren't as fast as some people claim they are for Netflix, but I expect that's more an issue with Canada Post than zip.ca. So, don't worry, you won't be stuck with "getting only Blockbuster".
  • From TFA "Blockbuster on the other hand is a bloated company" You'd be bloated too if you had over 9,000 stores and kept opening more (Thats more retail locations than WalMart in case you're counting). You just don't get that big without a certain amount of bloat , extra layers of management, etc.
  • Is this really illegal? It seems like a great niche for amazon. Sure its quite obvious that 98% of people renting music will be burning copies, but the same argument can be made for Netflix and GameFly . (Or could be made in the not-so-distant future. ) Is someone offering this? (DRM'd music downloads don't count.)
  • I don't know how much of a difference this makes, but consider the vastly different kind of labor force that Netflix can hire versus BB.

    Netflix can hire anyone (and just temporarily too if they want) to push discs and envelopes under a barcode scanner, attach labels, etc. Anyone can do this, and it's a no obligation job. No personal skills needed, or asked. Replaceable in a second.

    On the other hand, to work at a video store, you have to be the type of person who likes movies, can interact tolera

  • Netflix Totally Gets It (Score:3, Interesting)

    by Teddy_Roosevelt ( 757045 ) on Friday April 29, 2005 @04:40PM (#12387552)
    I've been a Netflix customer for several years. They totally get it. It's like someone went through every aspect of the customer experience looking for anything that might slow down, confuse, or annoy a customer, and then they eliminated it. This is the way businesses should be run, now that the Internet allows the customer to be king.

    Netflix, Amazon, Google, Apple and others get this, while, for example, Enterprise Rent-A-Car definitely does not. See http://www.failingenterprise.com/ [failingenterprise.com].

  • Both have physical distribution - Netflix wins (Score:5, Interesting)

    by SuperKendall ( 25149 ) * on Friday April 29, 2005 @04:40PM (#12387558)
    The assumption that Netflix does not have physical distribution methods (such as Blockbuster stores) is just plain wrong.

    The reality of physical distribution nodes is that Netflix has a lot - they are called distribution centers! In fact they are far better off than Blockbuster in that regard.

    Yes for perhaps 10-20 titles you might get stuff a little faster at Blockbuster. However a lot of stuff people rent is not going to be something carried at your average Blockbuster - and then the advantage of Netflix becomes apparent, in that you are going to get ANY movie no matter how obscure pretty quickly. Not just the 10-20 post popular at the moment.

    So basically Blockbuster has a lot of distribuition centers, but with poor stock. You can think of it like a really badly run cache management scheme, where Netflix fares much better.

    And both are just idling until online distribution takes place in large quantities - I'll bet that Netflix is more nimble in this regard.
  • I'm a current net Flix subscriber, and I love. I do wonder though. It takes 3-5 days to turn around a movie in the mail. It would take a little more than a day to download a 5 gig DVD to a hard disk over my DSL line to a Tivo like box.

    Basically, the first company to figure that out will get my money.

  • Neither (Score:3, Interesting)

    by Belgand ( 14099 ) <belgand@planetfo ... m ['s.c' in gap]> on Friday April 29, 2005 @05:04PM (#12387792) Homepage
    Frankly I dislike both options.

    Blockbuster (at least their retail locations) are terrible. They have a horrible selection that concrentrates only on crap released in the last two months. The prices are insane and the employees utterly clueless.

    Netflix has a much better selection, but it's still lacking. I don't get to select exactly what I want due to the list system and quite frankly I'm pretty damn picky about what I'm in the mood for. The turnaround time is also pretty bad. I want to select the movie that I feel like watching now, not a movie that I kinda want to see so I'll leave it around the house for a week or two until I'm in the mood and want to watch a movie.

    My local video store, however, has a great selection (though anime fans may appreciate their huge selection I'm far less appreciative when they shove aside horror to make room for it), generally knowledgable employees, excellent prices (almost everything is $2 for 5 days, new releases are $3 for 3 days, a few are $1 for 5 days) and are cunningly located (the main location is next to the cheap pizza place, they're also smart enough to have a drop-off bin on campus). One of the few times they haven't had something that I asked about the employees said "Wow.. we don't have Foo? I can't believe that, we need to order it." Lo and behold it was on the shelf there not long after. It's also the little things. If a film is not a new release, but rather an older film just recently released onto DVD it does not go on the new release wall like so many other locations. The owner once dropped off my lates fees when I went to pay them off citing that they were only a few hours late. Employees regularly let me skirt the drop-off time (ingeniously 7pm so that the new movies are on the shelves when you come by to rent) if I'm a little bit late. They carry porn (though a really crappy selection and heavy on hentai).

    I could go on and on, but quite frankly a good local shop will always win out over either a giant, crappy chain or a mail-order service in terms of giving the goods. Now, if you want something really obscure (not everyone is blessed with a store that has their own Troma section or carries the Short Films of David Lynch box) Greencine or some other option might help you find what you're looking for, but I doubt it'll be a primary rental location.

  • Blockbuster censors movies, Neflix doesn't (Score:4, Informative)

    by tomRakewell ( 412572 ) on Friday April 29, 2005 @05:54PM (#12388230)
    I am definitely rooting against Blockbuster. Don't forget, Blockbuster has been known for censoring movies -- editing them to make them more palatable for family viewing. Try renting a movie like 'Y Tu Mama Tambien' from Blockbuster or Walmart. You will end up seeing a version that has been edited for content.

    Maybe I'm 'misunderestimating' the maturity of the average American, but I think that as long as Blockbuster and Walmart have crappy policies like this, there will be a nice niche for the comparatively corageous Netflix.

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