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webdh

I got this same notice via email yesterday from Netflix, which was good news for me. I started back in 2002 with this plan for 11.99, then got raised a few times. Nice to see it going back down again.

leonardodicrapio

yes, i remember when 3-out was $19.99 and 2-out was $13.99 (about 3-4 years ago). with 3-out costing $17.99 (and a lot of people who have been members since january 2006 on a $16.99 3-out plan), dropping the 3-out back to $13.99 is a small adjustment.

leonardodicrapio

i meant to say "dropping the 2-out back to $13.99 is a small adjustment.

Edward R Murrow

Sweet, I love a price war between two competitors who both sell generic boxes of kleenex. It's great for consumers.

hueristix

This just in... Blockbuster is shuttering 282 stores, and raising prices. Totally Less Access.

leonardodicrapio

"I started back in 2002 with this plan for 11.99"

You are mistaken. Netflix had a 2-Out Limit-4-per-month plan in 2002 for $11.99.

The plan that is $13.99 is 2-Out Unlimited.

usermonster

Netflix must be feeling the pressure from BBO. Basically, Netflix is responding to BBO's new price for 2-out without Total Access. But I doubt BB will now go one better.

BoB

"But I doubt BB will now go one better."

Yep, BBO is planning on raising TA plan prices meanwhile they just announced they will close another 282 stores in the US!

Scott

BBO raising prices are a rumor, not a fact as yet. I've read from BBO itself that they will make "adjustments", which I personally still believe will be a combo of limiting TA along with some price increase. With the rising costs of doing business (postage, various overhead) which is inevitable factoring in the rise of inflation (which I'm sure everyone has noticed), I don't see how either Netflix or BBO can maintain price cuts. So you can be sure Netflix will turn around and raise prices in the months to come, as will BBO.
Either way, online renters will be paying more next year, one way or the other, either by price increases or more throttling.

leonardodicrapio

"BBO raising prices are a rumor, not a fact as yet. I've read from BBO itself that they will make 'adjustments'..."

Blockbuster is seeking to amend its creditor's requirement that its trailing EBITDA (earnings before interest taxes and amoritization) to only be a minimum of $140 Million for the year ending July 1, 2007(which is 44% less than its current requirement of $250 Million). And Blockbuster is supposed to be working with its creditors next month (July) on this amendment.

The amended requirement that Blockbuster is seeking would ramp up the requirements for 12-months-trailing EBITDA from $140M for the 12 months ending 7/1/07 to $165 million for the year ending January 6th, 2008.

If Blockbuster scrapes up against the $140 Million for the year ending this Sunday (7/1/07), Blockbuster will have to improve its EBITDA by $12.5 million for the 3Q07 versus 3Q06. Blockbuster should already know what their EBITDA for April and May were, so it is conceivable that they know they needed more than a 40% reduction of their EBITDA requirements for this quarter.

Blockbuster quarterly EBITDA after Total Access has decreased (compared to the prior year) by $12 million (4Q06 -- only two months of TA) and $52 million (1Q07).

http://www.marketwatch.com/news/story/blockbuster-netflix-settle-online-patent/story.aspx?guid=%7BD21F7461%2D71BF%2D4B14%2DAC02%2D627521E60BE1%7D&siteid=yhoof

leonardodicrapio

Meant to say:

"Blockbuster should already know what their EBITDA for April and May were, so it is conceivable that they know they needed more than a 40% reduction of their EBITDA requirements for YEAR ENDING this quarter (WHICH IS OVER ON SUNDAY, JULY 1, 2007)."

Edward R Murrow

"...YEAR ENDING this quarter (WHICH IS OVER ON SUNDAY, JULY 1, 2007)"

I'm not seeing in the BBI Form 8-K where they say fiscal year end. For all we know, they could be referring to end of calendar year. I'm sure all the Netflix employees who post here are doing some sort of circle-jerk-prayer-service hoping that TA changes for fiscal year rather than calendar year.

And what if Netflix doesn't get what they want which is a price increase for TA? What if TA simply excludes New Releases?

BBI marketing has already earned their pay earlier by segmenting programs to a BBOTA and BBO which is essentially a price cut for the 3 at a time program. This segmentation of of 3 out program by Blockbuster completely caught Netflix with their panties down.

leonardodicrapio

"I'm not seeing in the BBI Form 8-K where they say fiscal year end. For all we know, they could be referring to end of calendar year."

The 8-K is only about five paragraphs long, Ed, but here let me help you out:

"The proposed amendment would, among other things, amend the Consolidated EBITDA requirement such that Blockbuster’s trailing four-quarter Consolidated EBITDA requirement would range from $140 million for the four-quarter period ending July 1, 2007 to $165 million for the four-quarter period ending January 6, 2008. The proposed amendment would also include Consolidated EBITDA requirements ranging from $180 million for the four-quarter period ending April 6, 2008 to $250 million for the four-quarter period ending January 4, 2009. Additionally, the proposed amendment would defer applicability of the Fixed Charge Coverage and Leverage Ratio requirements from fiscal 2008 to fiscal 2009.

Although no assurances can be given, Blockbuster anticipates that the amendment will be consummated in July 2007, subject to market and other customary conditions, including receipt of consents from the required majority of Blockbuster’s lenders under the Credit Agreement."

http://yahoo.brand.edgar-online.com/fetchFilingFrameset.aspx?dcn=0001193125-07-143697&Type=HTML

"Those credit agreements would require the company to have $140 million in earnings before interest, taxes, depreciation and amoritization for the four quarters ending July 1 and $165 million for the four quarters ending Jan. 6."

http://www.marketwatch.com/news/story/blockbuster-netflix-settle-online-patent/story.aspx?guid=%7BD21F7461%2D71BF%2D4B14%2DAC02%2D627521E60BE1%7D&siteid=yhoof

usermonster

I'd pay a little more for TA -- it's totally worth it. On the other hand, if they close my neighborhood store, then it's totally not :)

IowaHawksFan1

During the summer months my work picks up considerably and I seldom have time to watch two to three movies a week. So for that reason in April I drop down to the two-out unlimited plan and once summer is winding down I jump back to the three-out unlimited plan.

I also got the e-mail about the price going lower. Did they only lower it for the two-out plan or did they lower all of the plans by $1?

Scott

Iowa, looks like it's just the 2-Out plan (for now). I logged into Netflix and checked out the plans - the only one changed is the 2-Out.
Since my trial period ends next week, I'll be curious to see what Netflix offers me to remain a customer when I cancel. Someone in another thread said BBO was "desperate" by offering discounts when subscribers cancel. Let's see what Netflix offers me - I'm sure they'll discount as well, since they seem to be "desperate" too by lowering their profit margins even more with the news today.

usermonster

When I quit Netflix a while back, there was no attempt at retention; there wasn't even a survey to find out why I was quitting. If I recall correctly, the copy was actually a bit surly. This might have changed, though.

BoB

"Someone in another thread said BBO was "desperate" by offering discounts when subscribers cancel."

I just quit BBO after another trial and they did not offer me anything special. Just alternative plans for the 1-out and 2-out plans but no "special" rate. I had them for 2 months and received 3 broken discs during that time - and never did receive the final replacement as they never did send a replacement in a 3 day window. I canceled on my last day so that could not have came into play.

Scott

I'm in my 4th month with BBO, and this month I have 3-Out for about half off after I tried canceling last week - got a discount. They must either randomly or selectively offer the discounts on cancellation, looks like.
My current Nexflix 2-week trial is almost half-way through. The disc shipped to me on Tuesday, June 26 finally arrived today. Broken. I signed up on Sunday for the trial, and am at the 5-Out plan (they offered me to change to 4-out, then 5-out the next day). So far, after one week, I have received 4 disks, the 3rd yesterday, and the 4th today (broken). So far, I'm not impressed. But will see.....

Edward R Murrow

"The 8-K is only about five paragraphs long, Ed, but here let me help you out:"

Ya, I'm not a Netflix or Blockbuster insider so I wouldn't know the difference between EBITDA and EBCDIC. Anyways, thanks for the massive copy and paste explanation of BBI's credit and earnings issues. I still see no reference to price increases or changes to the BBOTA program in what you copied and pasted here. Correct me if I'm wrong, but I thought that the topic was price war, price increases and/or program changes.

leonardodicrapio

i'm sorry five sentences was too long for you, ed. can you read even one sentence?

"The proposed amendment would, among other things, amend the Consolidated EBITDA requirement such that Blockbuster’s trailing four-quarter Consolidated EBITDA requirement would range from $140 million for the four-quarter period ending July 1, 2007"

leonardodicrapio

BTW, Ed, in case you can't figure it out, that quote above is answering to your question:

"I'm not seeing in the BBI Form 8-K where they say fiscal year end. For all we know, they could be referring to end of calendar year."

about my statement:

"Blockbuster should already know what their EBITDA for April and May were, so it is conceivable that they know they needed more than a 40% reduction of their EBITDA requirements for YEAR ENDING this quarter (WHICH IS OVER ON SUNDAY, JULY 1, 2007)."

Old Timer Too

And the arguing goes on.

NF is attempting to meet BB's new mail-only prices by limiting it to the 2-out program. That's really not surprising since they have always _appeared_ to want a profit on _every_ account (that was my experience). Thus, two-out is logical, since I seriously doubt there are any two-out heavy users. A bit of market strategy in my book.

While I don't fault a company for wanting profit and credit NF's pres for a low salary (in comparison to other officers in other companies, including BB), I was rather irritated (okay, angered) by the way they did it. While still advertising "unlimited" they used means beyond my control to "limit" the rentals. I don't know if they still have the word "unlimited" or something implying no limits in their advertising or web site, it appears they have started using even less obvious means to limit the number of discs a person _could_ rent (as Scott said in one of the other blogs).

And Leo, just to let you know, I consider your posts about EBITDA to be non-sequiturs, mostly because I don't care to read single four-line sentences that seem to go on forever. I'm not faulting your right to post those, but for a lot of us, they really are meaningless. I deal with far too many acronyms as it is and I don't need them here.

I think, and correct me if I'm wrong, you are saying that BB has to pony up some serious funding to meet its committments under various regulations by today, which is related to the four quarters (I didn't read fiscal year) ending today. It still could be the end of their fiscal year, but the regs appear to be related to the four quarters ending today, and not their fiscal year.

Old Timer Too

Hm. I'm in a different time zone... Yesterday - east coast time.

Firstlawofnature

Just to help out EBITDA = every blockbuster in texas dies Antioco or even blockbuster is trading down Antioco or earnings before interest taxes depreciation and amortization.

SofiaSilva

I propose not to hold off until you get enough amount of money to order goods! You should just get the loans or just commercial loan and feel yourself free

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