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Corey3rd

Blockbuster shares went up 28 cents to $3.83 - but Netflix is up 86 cents - to $28.10. Who got the real bounce out of this news?

alkamest

Wow...I would never cancel my Netflix account but was considering trying out Blockbuster for a month or two. Just to see how it was. But this is just shady and seems so wrong...I would never do business with a company that would treat their customers like this.

Im Not A Turnip

Hey Old Timer Too,

Blockbuster's prices may be "extremely competitive" on the mail-only plans, but that's no guarantee that their PERFORMANCE is competitive. From what I gather, that varies drastically from city to city.

I twice gave BBO the opportunity to lure me away from Netflix and they failed both times. I always mail discs back on Mondays. While Netflix consistently has replacements back in my mailbox on Wednesday, Blockbuster usually didn't get movies back to me during the same WEEK!

That's the experience I've had in OK City - I've heard the opposite from people in other locations.

Allen Jones

I hate Block Buster.

Allen Jones

I hate Block Buster.

Bj Thomas

If you are going to cancel BB, make sure you do it the night before they bill you. If you cancel 2 or 3 weeks before your bill date, they will not send you any new movies, even though you paid for the whole month.

Edward R Murrow

"Who got the real bounce out of this news?"

Is that a trick question? Let's go through some basic investing with the assumption that we have $1000 to invest.

The NFLX example:
1) $1000/$27.24 (NFLX close on 20-Dec)
2) We now own 36.71 shares of NFLX
3) 36.71 shares * $28.10 (NFLX close on 21-Dec)
4) Our shares are worth $1032

The BBI example:
1) $1000/$3.55 (BBI close on 20-Dec)
2) We now own 281.69 shares of BBI
3) 281.69 shares * $3.88 (BBI close on 21-Dec)
4) Our shares are worth $1092

http://en.wikipedia.org/wiki/Dollar_cost_averaging

Pretty obvious to me who got the bigger pop on Friday. Are there any questions?

Old Timer Too

Im Not A Turnip: Yup. You are absolutely correct. A lot depends upon where you live. I happen to live in an area where there are actually two DCs for NF and one DC for BB. They both provide exactly the same mail only performance.

So... YMMV (Your mileage may vary)

The ironic thing is that when I mail titles back on Monday, NF has processed them on Tuesday and I get them on Wednesday. Some are addressed from Carol Stream and others from a different Chicago address. If they can get the order over in time, both DCs ship the same day.

I get the feeling (and I may be just dreaming on this) that NF may attempt to get rid of that one day delay when they ship from a more distant DC.

Old Timer Too

Who got the real bounce? The investors. Doesn't make any difference which company, NF shares are still worth more than BB and are likely undervalued at that. Right now, I'd feel a lot safer with my money in NF than BB, mostly because I suspect BB will take another beating if and when they publish subscriber numbers at the end of the quarter. I also think it will take a lot of doing to drag BB back into full profitability and save them from total financial collapse.

someguy335

This is annoying that BBO isn't putting the new pricing online yet.

I am very tempted to switch to NetFlix just to spite BBO. It's just a shame that I hate using the Watch Now feature, and wish I had a cheaper option that didn't come with it.

I'll just wait and see...

My calc shows NFLX up in percentage terms more than BBI from wed's close to friday's close. In addition NFLX's equity market is much higher than BBI's so the market, in the short term, perceives the TA price increase overall adds more value to NFLX.

Corey3rd

Oldtimer, if you're going to daytrade the stock, you'll be losing your BB advantage on brokerage fees. Now if you've held onto your stock for a year, you'll notice that NF has double it's price per share while BB is worth half its high for the year. Although it's nice to know that you can buy a share of BB cheaper than renting a DVD from the store. Maybe they should have a package deal.

sure the idiot investors have jumped on BB because they somehow think "charge more - make more." But the harsh reality is that a lot of good will that BB generated with the BBOTA program has been tossed out the window. I've been a lifelong BB Hater (and no its not because of a late fee from '91), but I embraced BBOTA. But I suspected they'd pull a Lucy and the football stunt with us. And I did declare that if they jacked up the price once, they'd jack it up again so I was through with them.

If BBOTA is such a major money loser, they need to just kill the program instead of offering various pricing schemes for "unlimited" rentals and exchanges.

leonardodicrapio

"My conspiracy theory is Antioco and Icahn had big short positions on NFLX and used BBI's cash to wreak havoc on it. If done right they made far more on the short than they lost on the long. Just a theory to explain how irrational those two behaved."

My conspiracy theory is that John Antioco (the ex-CEO of Blockbuster) and Larry Zines (the ex-CFO of BBI) implemented the Total Access plan to accelerate the growth of Blockbuster Online so that Blockbuster reached the subscriber count goal (2 million) that Antioco repeatedly said they would reach by the end of 2006.

The top executives at Blockbuster stood to benefit from hitting these subscriber goals to the tune of millions of dollars. Meanwhile, Blockbuster lost about $50 million in 2006 (not counting resolutions to multi-year tax audits that made it look like Blockbuster made money in 2006 -- Blockbuster paid approximately one billion dollars in taxes in the 2002-2005 time frame while the company was losing billions of dollars -- is it really a surprise that Blockbuster was paying too much in taxes?). Blockbuster's top executives collected about $10 million of bonuses for the Blockbuster's great results in 2006.

hueristix

Happy Holidays to all- this latest news is telling us that Blockbuster is still grasping at straws while Netflix is still methodical. Both stocks are up about 20% this week- sweet! Over the past year, NFLX up about 5%, BBI down about 24%. Much of this comes in the last month, with N up about 30% and B up about 2-3% I really think NFLX is the money maker for 2008, but I have been a cheerleader all along.

Let us look at the brief history of BB Online strategy.

First, they lower prices too much and offer a deal (TA) that was too good to be true. The goal here was obviously to harm Netflix and increase online market share. Mission accomplished. Only diehards like me did not switch over.

Then they raise prices and kick out some customers. Right here we see that Netflix was right by saying is was a matter of when not if. The shocking part though is how brutally they kicked out certain customers in a mysterious fashion, refusing to g-father. The first step, above, showed the world that a long rental queue is not enough to prevent the fickleness of the video consumer when it comes to finding a great value. Those customers certainly were not about to show loyalty to BB when they weren't getting any in return

Now, they (re)raise prices in a shady manner and again alienate their customers. Their churn is going to be out of control and they will lose most of the customers they gained through the price war.

And now the circle is complete- people like me never went for TA because we remember too well the days when BBI had us all by the nuts and abused that power. Trumped up late fees, etc. Looking at the long term power of each brand, I think Netflix is absolutely crushing Blockbuster, esp. after this nonsense.

I can see why Netflix stock will go back up... The only question to me is: Why is BBI rallying too?

Edward R Murrow

"And now the circle is complete"

Hueristix, all in all - not a bad post. Your loved ones do need to schedule a NFLX Kool-Aid intervention for you though. The circle isn't complete though. There will be a mass exodus from BBO by customers to NFLX. And rightfully so since BBO has not taken the high road back to profitability. Couple this with new NFLX customers from gift subscriptions this time of year and you will have a massive inflow of customers competing for DVD's, especially New Releases. At some point, these customers will get tired of the eventual throttling and figure out a way to get the New Releases that are so costly to NFLX. I've found that the only way I can control what New Releases I get and when I get them is to use the BBOTA in store trades.

Oh and Leo, you're off on some sort of conspiracy theory rant worthy of Oliver Stone.

Jefe

I just canceled my Blockbuster Total Access subscription after about 11 months of service. During that time they changed my plan twice, both to my detriment. My original plan was for 2 out, unlimited in-store exchanges. Soon after luring me in with that deal they changed it to 3 in-store exchanges per month. Then, a couple weeks ago, they notified me that my monthly fee was increasing from $14.99 to $16.99 per month. All this in less than a year. I feel swindled, and I'm going back to Netflix.

Loring

earlier this year BB added total access in lieu of my 2 free sttore coupons. It was a nice way to get new releases and a few more disks per month altho some days there was really little to select at the store.
Then they changed the plan to limit me to two TA exchanges without restoring my e-coupons.
Over the last couple of months I have noticed that instead of shipping immed after receiving disks at the store or post office and even before physically receivinbg the disks they would ship a day after or two or sometimes more after receiving the disk - a siginificant slow down.
Now they are raising the price again eff. 12/27/07.
I will cancel my member ship at the end of the period. I have already subscribed to NF.

BTW, when you cancel with BB, you have a 30 days to return any disks in the mail or in your possession w/o being charged.

Basil

What do folks expect? The lost half a million customers last quarter, so of course they need to find a way to stabilize their profit, so they will have to do it with the existing client base.

It's obvious their marketing strategy for new customers is pretty dismal if they lost 500,000 customers in three months.

Not that Netflix has a better system for treating existing clients more fairly to obtain new releases, but Blockbuster vs. Netflix is like PC vs. Apple. You have an old, tired, over-rated and unimaginative group like Blockbuster who lost a huge chunk of business to Netflix because they had a better way of thinking outside the box.

Another point with Blockbuster that I find particularly unappealing is their strong arming of studios to obtain the rights to edit films for content to fit their value structure. They have for decades stocked almost every T&A movie from the 80's, yet refused to carry NC17 and certain unrated films because of the "controversial" nature. Can anyone at Blockbuster get a dictionary and look up the word "IRONY"???

What blockbuster isn't telling you is that their in-store revenue has decreased while their overhead is increasing. I predict that in the next 18 months (if not sooner), they will either close up to one third of their physical stores or file for bankruptcy protection.

Firstlawofnature

"massive inflow of customers competing for DVD's"

I can see the headline...Netflix implodes from massive inflow of customers. NF has built its business to scale from day 1. They are not like BBI trying to take the 20 mph curve at 60. They'll be ready for the surge.

BBI's new mgmt team realizes the hole they dug themselves into. Be weary of violating convenants in a credit crunch. BBI has to start generating cash. It might get worse first as redbox rolls out so losing money online just fell out of fashion. Simple as that. BBI has very little margin for error.

rjm

Well, I was on the all access 3 at a time for $17.99 and they were only going up to $19.99 but, I have 9 months left on a NF giftcard so I wanted to cut expenses.

When doing so it asked my primary reason. I checked about 8 of them because they have all kind of issues.

They made me pick one and I said I was going to NF.

They offered me a few deals, the best of which was 4 free weeks on the by mail only plan. Then their regular rate at that time. Which is $16.99 but going down to $15.99 but I plan on cancelling by then.

The other options were $13.99 for 1 at a time and unlimited instore and $13.99 for 1 at a time. (Neither of these offered anything free)

I went with the free 4 weeks but only because Im positive I will cancel after that.

I hated to let go of what others are going to pay $34.99 for but I know if it was heavily used, the price wouldnt remain at $19.99 for me. (And I cant blame them)

BB has to do whats best for them and I have to do whats best for me.

4 free weeks before cancelling is better than cancelling & getting nothing !

As I said, I have a prepaid NF account and they havent been throttling me plus I get faster turns with NF.

JakeMont

In October my Block Buster Online deal was from 17.99 a month for 3 at a time with _unlimited_ in store exchanges and an average of 3 days turnaround. Since then it has gone to 19.99 with only 5 per month in store exchanges and a 5-6 day turnaround. While reports of netflix throttling does worry me a bit, I can not take it any longer ... Goodbye Blockbuster.

(The doubling of turn-around time is the kicker).

Imus

This is for all of you complainining about BBO and wanting to switch to NF. Things are not as rosy on the other side either. I've been a NF customer for more than a year (3 at a time), and their service has gone down in my opinion. Forget about getting new releases in a timely manner, it's more like "very long wait" forever. And if you happen to have Blu-Ray or HD-DVD selected or both, it's even worse, and a lot of movies ship from far away locations because they're unavailable in your area. And now NF has removed the "releasing this week" page from my account so that I have to look to other websites to find out which movies are being released each week (I guess NF's phylosophy is that customer ignorance is bliss and good for their bottom line). I recenlty opened an account with BBO as well (3mail/5exchanges). I find it to be a good deal, even with the price increase to 19.99. At least I am able to exchange movies i get in the mail with Blu-Ray titles at the store that have been impossible to get from NF. So, all in all, neither provider is perfect. NF 3/16.99 BBO 3/15.99 or 3mail/5exchanges/19.99.

Imus

This is for all of you complainining about BBO and wanting to switch to NF. Things are not as rosy on the other side either. I've been a NF customer for more than a year (3 at a time), and their service has gone down in my opinion. Forget about getting new releases in a timely manner, it's more like "very long wait" forever. And if you happen to have Blu-Ray or HD-DVD selected or both, it's even worse, and a lot of movies ship from far away locations because they're unavailable in your area. And now NF has removed the "releasing this week" page from my account so that I have to look to other websites to find out which movies are being released each week (I guess NF's phylosophy is that customer ignorance is bliss and good for their bottom line). I recenlty opened an account with BBO as well (3mail/5exchanges). I find it to be a good deal, even with the price increase to 19.99. At least I am able to exchange movies i get in the mail with Blu-Ray titles at the store that have been impossible to get from NF. So, all in all, neither provider is perfect. NF 3/16.99 BBO 3/15.99 or 3mail/5exchanges/19.99.

Imus

Sorry for the double post above. I have one more thing to add. As I said earlier, I'm a subscriber to both NF and (recently) BBO. I think that the reason NF service has worsened lately is because of the increase in customers they've been experiencing this summer (which is good for them) and their inability to meet the increased demand from an expanded customer base, and if more people jump ship at BBO and join NF, things will get dicey at NF if they don't fix this problem with supply and demand.

JD

I understand what they are trying to do but why does it ALWAYS come with absolutely TERRIBLE customer service??

Why are we getting an email ONE WEEK out before they jack up the price? Why are they not putting the new prices online until the DAY they go up?? That leaves the current customers with no options to select a different plan...we are all stuck with our existing plans at the higher rate for another month. And based on the complaints I've seen about canceling during the early part of the pay period, that is not really an option either. I am just baffled at how poorly this company executes basic customer service skills...

JD

I understand what they are trying to do but why does it ALWAYS come with absolutely TERRIBLE customer service??

Why are we getting an email ONE WEEK out before they jack up the price? Why are they not putting the new prices online until the DAY they go up?? That leaves the current customers with no options to select a different plan...we are all stuck with our existing plans at the higher rate for another month. And based on the complaints I've seen about canceling during the early part of the pay period, that is not really an option either. I am just baffled at how poorly this company executes basic customer service skills...

JD

I understand what they are trying to do but why does it ALWAYS come with absolutely TERRIBLE customer service??

Why are we getting an email ONE WEEK out before they jack up the price? Why are they not putting the new prices online until the DAY they go up?? That leaves the current customers with no options to select a different plan...we are all stuck with our existing plans at the higher rate for another month. And based on the complaints I've seen about canceling during the early part of the pay period, that is not really an option either. I am just baffled at how poorly this company executes basic customer service skills...

Mark P

Terrible decision. With two increases within the same year shows that they really dont know what they are doing. I think they will probably lose at least another 500,000 with this plan. The only reason i went to bb was because i could trade the movies in the store for new ones but since they are jacking the price up to 35 bucks, might as well go back to netflix. I can at least get older movies and tv shows with the online service. Why would anyone stay at those rates. Netflix website is far superior to blockbuster and i dont have any issue but ive heard people have had horror stories about getting their dvd's wit blockbuster as well

BG

I left Netflix several years ago because they were throttling me. What I don't see commented on much is that along with the 2 increases this year, every decent movie changes to "Long Wait" at the top of my queue - though they're available in the local store. The last month I've gotten not much but TV nature documentaries. BTW - on a 3 DVD/5 in-store exchange plan I average around 15 per month. I think the online throttling is their way of pushing people into the stores. So they're actually pruning people like me who don't have a way of getting to the one store (5 mi. away) very often.

Going back to Netflix before my next BBO billing date. I'll just have to curtail my usage. Shame that they're using Walmart tactics - after driving neighborhood video stores out of business they start to limit choices.

BG

PS - This is Hollywood Video's window to move into online rentals - it's wide open. (That's where I find new releases ahead of time anyway - though I'll check this site too now that I found it)

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