Wednesday, April 1, 2009

Blockbuster loses ground to Netflix

As of tomorrow, I will have lived in my new house for exactly one month. I love everything about it. Everything, that is, except its poor proximity to a public mailbox. And since our mailman seems unwilling to take our outgoing mail, public mailboxes it is.

At my old place, the proximity was perfect. There was one right on the corner. Up until a couple months ago, at least, at which point it was mysteriously uprooted. I guess even the post office is going through a recession. Strange, too, because it was on a main road. Still, I had a conveniently located mailbox for most of the time I lived there.

At my new place, on the other hand, the closest mailbox is one loooong block thisaway, followed by one loooong block thataway. My wife tells me that it's not that bad, and really, it isn't. But it's more than just a walk across the street. If you're getting there on foot, it'll be a five-minute round trip. You can't just swing by on your way to the car, especially if you're running late, which I always am.

Normally it would not bother me that I didn't have an easily accessible mailbox, because like most people, I don't send as much mail as I used to. Unfortunately, I am sending a lot more mail than I did just a month ago.

That's because Blockbuster has made a significant change in its rental policy. One that shrinks the size of its advantage over Netflix, and has me seriously questioning my choice of online rental purveyor.

First, a little history.

I get endless amounts of guff for having an account with Blockbuster rather than Netflix. Most people who share my larger world view think that Blockbuster is the WalMart of video rental companies, while Netflix is the friendlier Target. In a vacuum, I'd agree. But I can't ignore the real-world differences that give Blockbuster a leg up. In fact, the reasons for my preference are manyfold, and until recently, I never had much trouble making the argument for Blockbuster.

Let's start with the negatives about Netflix. I used to have a Netflix account, and I liked it just fine. But when I took an involuntary hiatus from reviewing movies from late 2003 to early 2005, I decided my Netflix account was a luxury I could no longer afford. When I tried to come back, and take advantage of some special deal that Netflix was offering, they rudely told me that the deal was intended for new customers only, not returning customers. This pissed me off, and I joined Blockbuster on principle. Don't want my business? Fine, I'll give it to your main competition.

Plus there was the whole class action lawsuit against Netflix. If you don't remember, Netflix was sued for a practice called "throttling." According to the lawsuit -- and since Netflix settled, we should assume the allegations had merit -- the company had a practice of delaying shipment of movies to people who watched too quickly. A returned rental should immediately jar loose the next in the queue, but Nextel decided that certain customers were taking too much advantage of the system by watching and returning the movies as soon as they got them. It was a totally legitimate way to utilize the service, but Netflix came to regret the leniency of their own rules. So they simply slowed the whole process down by inserting a buffer of several days when they felt a customer was getting too good a deal. They relied on the built-in variability of the postal delivery speed as a form of plausible deniability -- though it didn't keep them from getting caught. Meanwhile, customers who turned their movies around less quickly, and therefore brought Netflix a higher return, always received their next movie immediately, keeping them completely satisfied. If the high-volume renters complained, Netflix basically didn't care. Those renters could take their business elsewhere, and Netflix would only lose its least valuable customers.

This, of course, is illegal. Shame on you, Netflix.

But Blockbuster was not merely my only other alternative. Their business model had a ton going for it as well.

First off, Blockbuster has the distinct advantage of actual brick-and-mortar buildings. This means spontaneous access to the most popular new releases (which frequently read "short wait" or even "long wait" in the online queue), as well as a decent selection of older releases. If you wanted more obscure titles, you still had to go online, but that's fine, because most avid viewers like to watch a mixture of the obscure and the mainstream, the old and the new. Blockbuster still sent you a maximum of three movies at a time through the mail, and complemented that with a couple coupons a month for free in-store rentals. Netflix had no answer to this.

But wait, it got better. Blockbuster then decided that any movie you would normally return through the mail would now serve as the equivalent of an in-store coupon. You sealed the return envelope and brought it to the counter when you were ready to check out your next in-store movie. They'd mail it back for you, and you'd walk away with something new without any charge. They did cut back on the number of coupons that you printed online -- now there was only one a month. But that didn't matter, because you could always find something to return in exchange for something new. And the act of returning it still dislodged the next available movie in your queue. If you timed it all right, you could theoretically have six of Blockbuster's movies in your possession at any one time -- actually, seven, if you used your monthly free coupon.

It was like movie heaven. I was drowning in movies. It got so that I'd only drop a movie in the mail if I were heading out of town, and therefore didn't expect to get the immediate utility out of the in-store rental. I felt like I were getting away with something.

Unfortuantely, Blockbuster felt the same thing. And like all good things, this too had to come to an end.

And so it was that a couple Thursdays ago, I walked into the Blockbuster in El Segundo and saw a new sign up on the wall. The sign was excited to inform me that there would no longer be any due dates for in-store rentals, at least for those of us who had the online account. This didn't knock my socks off, because I'm not the kind of guy who normally has trouble meeting return deadlines. Even if I were, Blockbuster only penalizes you once 10 days have passed since the day you rented -- and that's only with new releases. For older releases, you get closer to 16 days.

Of course, I should have realized that the recession would cause Blockbuster to reexamine a business model that had given us way too much for way too long. Yeah, you could now keep new releases from the store for six months if you wanted. But here was the difference: You wouldn't get another new movie through the mail until you returned it. No longer could you theoretically have six Blockbuster movies at once. The new maximum would be three, or four if you added the monthly coupon you print out from the website.

I had already been having a bad day when I discovered this, and so it was with an extra sense of glumness that I brought Role Models up to the front counter. I asked the woman for clarification to make sure I understood the policy change correctly. Unfortunately, I did.

I'm convinced this had something to do with why I didn't like Role Models as much as I thought I should.

This may seem like a lot of background and explanation for what amounts to a relatively small policy change. But the small change has made a big difference in my movie watching habits. I now have to weigh the new release against the online (obscure) rental. Blockbuster used to let me have both -- now it's forced me into an either/or. And now I don't really know how much difference there is between Blockbuster and those impudent throttlers at Netflix.

[Is this post boring you to death yet? Me too. I'll try to hurry it along.]

Maybe I should explain the distinction I observe between my two rental methods. My online queue is filled almost exclusively with titles I doubt I will ever find in the store, and movies I've been approved to review usually creep up to the top of the queue. I need to have a steady flow of these coming in, in order to stay on top of my reviewing work. But since I can't just watch movies for work, I need to complement this flow with new releases, things I can pick up on a whim for a Friday night. These two channels kept my renting world in harmony.

Oh, I hustled Role Models back to the store the following Monday and got my new movie soon enough. But in the past I wouldn't have prioritized returning it, at least not until I was on the verge of having to pay a fee. I might have returned it sooner if it were convenient, but I wouldn't have been worried, because my new movie would be arriving in the mail anyway. It afforded me the chance to wait until I had to run errands near the Blockbuster -- not make a special trip.

Since Role Models, I've watched four Blockbuster movies I received through the mail. I haven't returned a single one of them for an in-store rental. And this has meant memorizing the locations of all convenient mailboxes on my regular driving routes, like I might memorize ATM locations, or the locations of my favorite gas station chain. Dropping my Blockbuster movies in the mail has become a special errand unto itself. And while I can still spontaneously return one for a new release, it's at the expense of my secondary source of income.

So I'm wondering ... do I let Blockbuster go? Do I forgive Netflix and go with the sentimental favorite in this clash of the titans? The one who actually blazed the trail in the whole movies-through-the-mail concept? After all, my wife has a Netflix account. It would be easy enough to expand her two-per-month program into something we can both share. (The fact that we even have separate accounts is ridiculous, but let's just say we each have our own viewing priorities, and each like to be masters of our own queues). Lately I've even had to acknowledge the potential superiority of the Netflix catalogue. With certain titles I'd been assigned to review, but couldn't find on Blockbuster, my wife saved the day by adding them to her Netflix queue. For which I am grudgingly grateful.

It may all be moot soon anyway. The future of both Netflix and Blockbuster seems to be downloads, movies you can watch without involving the postman at all. Without involving inconveniently located public mailboxes, or drives to the video store. I've been as slow to give myself over to that as I've been slow to stop recognizing CDs as the primary method of delivering me new music. But it's certainly an approaching reality.

I don't send my letters through snail mail anymore. Maybe it's time to stop sending and receiving my movies that way as well.

No comments: