A Sad Day for Online Video Rentals

Posted on 16. Feb, 2006 by in Business

If you remember a while back I wrote about the value of the Blockbuster Online rental service. At the end of my experiment with Blockbuster I switched to Netflix because my movies were taking a week or more to travel 35 miles from the distribution center.

However, after a few months with Netflix I cancelled my account with them last week because of the same reason. After constant delays with both companies I thought that something “shady” might be going on. So it was no surprise this week to read numerous articles about how Netflix has changed their TOS to include wording that essentially admits to the practice of “throttling” – or giving frequent renters lower priority and slower shipping times.

I could live with one company breaking its promise of “unlimited rentals” – but when I heard Blockbuster updated their TOS to include the same verbiage, I could hear my image of the online rental industry sink to the bottom of my toilet. Why? Because they should have known better. Plain and simple.

It’s no surprise that frequent renters want to get a great deal by renting as many videos as possible. That’s the point of signing up with these services in the first place – the convenience of not driving to the rental store and the possibility to avoid a $4+ rental fee. But when those services are no longer available then the service is just not worth it to the consumer. And in anticipation of this Netflix and Blockbuster should have adjusted their strategy accordingly. How? I, as well as the Fools over at Fool.com have some great ideas on saving money to cover the “cost” of those high-volume renters:

  1. Be honest. Specifically state that you can only rent up to X number of movies per month under this plan.
  2. Take advantage of DVD mailers for printing advertisements, inserting demo DVDs, etc.
  3. Add 3rd party advertising on their bare-bones websites.
  4. Beef up online advertising – these are the same “geeks” you’re trying to buy into the “convenience” of the service

See what I mean? It’s not rocket science. And if they don’t start living up to their promise of “unlimited rentals” then they’ll find themselves replaced by McDonalds’ RedBox just as the market share of the big Cereal makers has been slowly taken away by private label cereals. People are loyal – but only to a certain point. Then price and loyalty to customers plays a big impact on consumer decisions.

One Response to “A Sad Day for Online Video Rentals”

  1. fhj

    17. Feb, 2006

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