“Total Access” helps Blockbuster finally emerge as a credible competitor; catching up with Netflix quickly
Written by Matt Pace (contact - e-mail) -- January 24th, 2007 |
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The once lopsided battle between Netflix and Blockbuster has become more interesting and competitive of late. During the final three months of 2006, Blockbuster emerged as a credible competitor after finally figuring out how to use its brick and mortar stores to its advantage.
Blockbuster was years late and millions of dollars short when it unveiled Blockbuster Online in 2004. Since then it has struggled mightily to imitate Netflix’s success without cannibalizing its 5,000+ U.S. retail locations. The results have not been pretty: during the first nine months of 2006, Netflix gained 5 net new subscribers for every one Blockbuster added. Netflix’s 3X lead in subscribers is also reflected in the traffic disparity between the two websites (http://snapshot.compete.com/blockbuster.com+netflix.com).
Total Access, Blockbuster’s reworked online offering that debuted in November, has finally injected some much-needed life into the underachieving service. Beyond simply allowing subscribers, if they choose, to speed up their rental queues by returning movies directly to stores, Total Access now entitles members to free in-store rentals as part of their subscription. Essentially it’s all of the convenience of an online rental service plus the added benefit of immediate access to movies.
Thanks to Total Access, Blockbuster had a break-out quarter in Q4, netting 700,000 new subscribers, which puts it narrowly behind the tally Netflix is likely to report later on today.
For Blockbuster, Total Access finally makes sense. Previously, store employees faced a clear conflict of interest: they were asked to hawk a service that, if successful, would likely lead to the elimination of their own job. These folks can now rest assured knowing that Blockbuster Online is no longer a replacement for the brick and mortar business, but rather one that works in concert with it. To get Total Access off to a strong start, Blockbuster outfitted its stores with wireless laptops (for enrolling new members) and incentivized employees to pitch the service…and pitch it they did as evidenced by the nearly 50% jump in Blockbuster Online membership during Q4.
Unlike Netflix, Blockbuster is not solely dependent on the online channel for new enrollments. Its ubiquitous retail stores had until recently been an underutilized channel for trumpeting the online service. The very stores the online subscription service was thought to render obsolete, are in fact the marketing trump card Blockbuster never seemed to realize it held in its hand. Indeed it’s these very stores, and their employees, that deserve the credit for Blockbuster Online’s Q4 resurgence: 58% of Blockbuster Online members enrolled in-store, rather than online, during Q4.
Total Access has also had a significant impact on Blockbuster’s online churn, or the percent of all members who cancel each month. Netflix reports this closely watched industry statistic, while Blockbuster has yet to. Using Compete’s data and Netflix’s online churn formula (Subscriber base at start of the quarter + new enrollments – cancellations, divided by 3) Compete calculates that during Q4, Blockbuster’s online churn dropped by nearly a third to 7.0%. Although this still pales in comparison to the 4.1% Netflix is likely to report later this week, it’s a far cry from the 9.5% churn Blockbuster Online averaged during the first nine months of 2006. Still, if Blockbuster had been able to match Netflix’s churn in Q4, it would have netted an additional 240,000 subscribers.
Netflix greeted 2007 with the unveiling of its long-anticipated movie download service which happens to counter Blockbuster’s newfound immediacy advantage. While Total Access helped clot some of Blockbuster’s membership hemorrhaging in Q4, Netflix’s continued innovation proves Blockbuster has much work left to do.
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January 24th, 2007 at 4:00 pm
I’ve used both services on and off for many months. Even before Total Access, BBO always provided me with more discs per month, averaging 15-18 per month compared to NetFlix 12-14. BBO also offered the advantage of being able to report discs in a reasonable time frame in the event they started to get behind or for an actual problem, whereas NetFlix claimed you could report in 6 days, in reality it is 10 days before the system would let me report. For instance I had a disc shipped on the 12th and it wouldn’t let me report it returned until the 22nd and guess what day they “received” it back, yep the 22nd.
Since Blockbuster rolled out Total Access there is NO comparison anymore. Period, end of discussion. Blockbuster provided over 50 DVD’s to me last month and is on the road to that about same amount this month.
On the 1st of January, I signed back up with NetFlix on a month long trial. As of today here are the lopsided number of discs delivered by both services 4 out plans over the exact same time period.
NetFlix: 10
Blockbuster Total Access: 38
Any kindergartner can see the better value. I am continually fascinated by people who are seemingly NetFlix cult members who refuse to acknowledge BBOTA is the clear winner, offer a product that NetFlix simply cannot ever match. I suppose if they want to continue to pay 4x what they need to for their entertainment that is their prerogative.
January 24th, 2007 at 4:01 pm
It’s not a hot dog eating contest… The number of people that can watch 38 movies in a single month is approxiamtely “2″ - the guy that wrote the previous post and the retired mail man that lives two floors below me. We Netflix members love it b/c the selection is second to none and the round trip time is usually 2 days - more than enough service to get our fix.
Netflix revolutionized the rental market… give credit where credit is due.
January 24th, 2007 at 4:56 pm
I had the exact opposite experience when I briefly had both services. NFLX provided me about 25 discs in the time that I got 12 from BBI, and most of my queue on BBI was “Long Wait”, even old titles. The main thing people don’t seem to understand about Total Access is that, yeah, its great to be able to go into the store to return your dvd, if you want to drive to the store. The reason why we like NFLX is because we don’t want to drive to the store, and the NFLX has a 2 day turnaround time.
January 25th, 2007 at 10:10 am
I had been a member of NFLX before and then I enjoyed the service for the first few months. Later I realized that it was getting slower and slower and had many days without a movie. I had to stop it.
But I am a value hunter - and since I joined Total Access I have not been one day without a movie - and the best part is that going to a store with a coupon lets you browse and get the latest releases without the wait. HONESTLY … IN MY OPINION BBI rocks from a consumer view point … but the only point of note is that what BBI offers is cutting into their profit margin which is sore for an investor.
January 25th, 2007 at 2:39 pm
I have also been a member of both services. When BB first introduced their on-line service I considered switching but like the fella above said, I wanted to give credit were credit is due and support Netflix because I figured the added competition would benefit me as a consumer. However, with BB’s Total Access plan the number of movies we get now is amazing. And now that BB has added Games with the instore e-coupon — Forget About It — the kids would Kill me if I even mentioned changing back to Netflix. Additionally, the instore coupons also mean that I even get a chance to see movies I want since I’m the taxi. Fair Disclosure — after I tried the BB Total Access plan I did invest in the company so I do currently have a position in BBI.
January 25th, 2007 at 6:37 pm
All BE WARNED,
I have been using BB for the last 4 months, yes even before Total Access. Everything was great, I always had a movie, and did not have to worry about turn around times.
Come January, things started to change. I returned a movie to the store, and new movie from my queue was not mailed for several days (never happened before). At first I thought it was a glitch, and they were adjusting their system. Now I see that it is a policy. Now, I have to wait for 3-4 days for them to mail my movies after I return the old ones to the store every single time. They give priority to you until your trial period is up, and once you signed up they START THROTTLING. We will see the effect in the churn rate of Q1 07.
I encourage you to try it, it is good deal, but DON’T BE FOOLED, your experience with the paid service will be very very different.
January 25th, 2007 at 11:36 pm
“after I tried the BB Total Access plan I did invest in the company”
I’ve seriously considered it myself since Total Access will virtually close down NetFlix once more people “discover” it like the other 700,000 new customers that did recently, over the next year the smart money would be on some calls for BBO and some puts for NF.
I was surprised the gentleman above is seeing a decrease in movies. Dec as gang busters for me and Jan is on track to be just slightly less or about the same. I’m guessing 48 - 50 for January.
Once Feb is here I’m dropping from the 4 out back to the 3 out plan as I have exhausted all the movies on my list and don’t have time to research a bunch more right now.
I personally feel NetFlix new attempt at VOD is a joke, kind of a hail Mary pass trying to deflect the Total Access juggernaut. Perhaps in 4 or 5 years NetFlix’s VOD might have potential as average Internet connection speeds increase and the DRM is broken, but by then the market will be flooded with competitors and Blockbuster has already announced it is entering the fray Q1 of 2007.
January 26th, 2007 at 11:03 am
WOW!!!
I was a Netflix subscriber and decided to give Blockbuster a try since I go there for my XBOX rentals anyway. Bye Netflix. You were ok, but BLOCKBUSTER is the BALLS!
Saw the commercial, and figured what all the fuss was about.
The new service is AWESOME! Great value and new sytem of trades fills my need for immediate gratification.
My advice for blockbuster is to push the gaming side some more.
THANK YOU BLOCKBUSTER!!!!! VERY SATISFIED CUSTOMER + WILL TELL ALL FRIENDS!
January 27th, 2007 at 5:42 am
Great post. I recommended the stock of Blockbuster to my readers back in early January. Check it out at http://stocksadvice.blogspot.com/2007/01/blockbuster-up-netflix-down.html.
– Faisal Laljee
January 29th, 2007 at 6:46 pm
I think Blockbuster Total Access offers the most movies for the money. But I’m still in my trial period. It will be interesting to see if I get throttled once the pay service begins.
February 4th, 2007 at 6:34 pm
I just switched to BB Total access and I am so glad I did. I was renting 3 movies a week from Netflix and the throttling was terrible. I would send customer service an e-mail and it would take forever for them to get back to me. So far every movie I have returned has gotten to BB in a very reasonable time. I keep older movies on the top of my queue and return them on Tuesdays on my way to work to get the new realeses. I get new movies in time for the weekend so I am averaging 5 movies a week. with netflix I was getting about 3 a week. BB store is on my way to work so their is no problem here. I understand that to some they have to go out of their way and for those maybe the Netflix plan is the one for them.
THANK YOU BLOCBUSER FOR THIS GREAT PROGRAM.
February 14th, 2007 at 5:27 pm
As a long time member of BOTH Netflix and BB (before and after Total Access) I hope that others will find this helpful.
Ok so I had Netflix back in the day. For probably about 2 years. I dropped it when movies went from a 2 day turnaround to almost a week. Gave BB a try. I’ve had BB for, again, about 2 years.
Everything was fine until Total Access. I used to get movies in a decent enough amount of time but things have changed. At first I thought that this would be a great way to get more movies and get them faster. Alas, I too have been disappointed by this new program. I have noticed the same problems others are mentioning. It is taking days and days for movies to clear my que.
It has now been 4 days since I returned 3 movies to the store. Only 1 movie has been shipped out and that took 3 days for them to ship! Now why would this be when they were all returned at the same time? Also, it is still showing that I have all 3 movies out! How could I have even one of the movies if BB just sent me the next one? Wouldn’t I have to return 1 first?
Not only that but the 3 movies I returned over A WEEK BEFORE this last batch (on 2/4) are still showing on my que!! So I now have 6 movies showing on my que as not being returned. Now how could I still have the first 3 movies if BB sent me out the next 3? I would obviously have to return the first 3 to get the second 3. I mean come on!
The first 3 were on the que for 8 days AFTER I returned them to the store. The second 3, as I said, for 4 days. I had to use the “Report problem - I returned the movies” option online to remove them from my que. That was 2 days ago and they STILL haven’t sent my other 2 movies out! So now I have a que showing 1 shipped movie and there are 2 blank spots just sitting there. (update – since I started typing this they have now added that they are sending out a second movie)
I thought this Total Access would be a great way to get more movies but when it takes so many days for them to even register that they have been received, another day or two to ship and then another few days to receive them, what’s the point? I might as well just mail them back, it actually takes less time.
I THINK I MAY HAVE COME UP WITH A SOLUTION since I first started typing this. I have yet to try this but the logic seems sound and I encourage everyone who reads this that has had similar problems to try it. My plan is this – once I receive my movies in the mail I am going to (1) log on to my que (2) click the ‘Report Problem” link (3) check the option for “I have returned this movie” and (4) click “send my next movie”
I think that this will give me a day or two head start on the process seeing as how they send the next movie within a few days of you reporting this. In fact, because the arrival date is usually a day before you actually receive it, you could in theory report that it has been returned before you even receive it! The only thing I can see to come of this is that they may flag me for reporting so many DVDs being returned. However, since I will actually be returning them what can they really do? :-) I think if enough people start doing this someone will notice ‘wow, there are a lot of people reporting return issues’ and maybe, just maybe, this will move them to do something about the return bugs.
February 16th, 2007 at 4:34 pm
I have been a netflix user for about the last 4 months and am also about to wrap up my 1 month free trial with Blockbuster Total access. On paper, Blockbuster Total Access just can’t be beat. I mean, free rental with each movie returned to the store? The store returned movie being immediately take out of your queue and the next movie shipped? Sounds like a recipe for an amazing service.
Unfortunately, my exprience with Blockbuster Total Access has been a let down, compared to what it advertises, from day one. I signed up late morning on a Monday and didn’t get notice of my first 3 movies shipping out until Wed. which then arrived on Friday. I chalked it up to being a new user being setup in the system for the first time and watched my movies Friday night and took them back Saturday afternoon and got 3 free rentals. So far so good! BUT, that “immediate check-in” Blockbuster crows about is so not the case. Those movies didn’t even register as being returned until Tuesday night at around 11pm. My next movies shipped out the nex day and again arrived on Friday.
This situation has continually repeated itself, on average it has been taking Blockbuster almost 48hrs or more from the time I have a movie scanned back in at the store until it registers on my queue. Add to that the day it takes to get to me (movies ship from St. Louis to Memphis, about 5 hrs away) and the turnaround has just been snail paced. Now I will admit that the free rentals are nice and work towards balancing the number, but I mostly select harder to find older or obscure titles that are not in my local store, the free return rentals are nice to keep me up with the latest releases, but since they’re not my primary interest, their actual value to me is limited. What I really liked about the Blockbuster plan was their immediate return setup, but it seems to be a bunch of hot air.
Compare this to my netflix experience where on average, a movie I send back to them shows as returned the next morning! and movies they ship out get to me the next day! Granted, netflix has a warehouse in my town, but I still must say I am impressed. I usually rent alot per month and things will slow down on occassion, but for the most part the “throttling” has been minimal.
Now don’t get me wrong, Blockbuster’s service isn’t pad, per se. It just doesn’t live up to its own hype. The benefit of being able to return it to the store right now seems about nil in so far as speeding up getting movies from your queue. For me, it actually takes less time to mail it back to netflix. I also find Blockbuster’s interface online to be far less intuitive and useful in providing detail about what I’m requesting and when I’ll get it.
All in all, if you’re main interest is getting widely available and new release movies, Blockbuster might be the best choice because of the free in store rentals. But if hard to reach titles and quick turnaround essential, I’d stay away for now.
February 27th, 2007 at 12:13 pm
I am disgusted in BlockBuster Total Access. I think I received more movies during the 2 week trial than I did in an entire month paid. Although they were skimpy during the trial as well. They are now taking at least 6 days to send, not 3 DVDs, but 1 at a time, then maybe 1 the next day, then maybe 1 2 days later. I have more than 45 DVDs in my queue, and movies are listed as available. I return the movies directly to the BB store the same day I receive them. They are now sending me the movies which I have at the bottom of the queue, and skipping the ones I put on the top of the list. I recently have been getting movies which are unplayable (damaged discs). I called the voice support 3 times and was on hold 20 minutes, 17 minutes, and 22 minutes each time.
I received 1 movie today which I reported ‘not sent’ because they claim it was sent on the 21st, and today is the 27th. I tried to remove it from my queue (since I reported to resend), and it will not remove. The movie is defective, it gets about half way and quits playing (I have a very good disc cleaning kit). Lots of scratches and marks.
The movies are sent from the same city NetFlix sends movies to me from. NetFlix, with me putting the movies in my mailbox for pickup, receives and sends me movies quicker than me taking the Total Access movies directly to BB.
BlockBuster Total Access is TERRIBLE. It’s the same quality of service as going to a fast food restaurant now-a-days and ALWAYS having something wrong with your order.
March 3rd, 2007 at 3:14 pm
Forgive me if this was said already, but Netflix churn appeared to be unaffected in the most recent results. It would seem that most new users were current non-online Blockbuster card holders, and not Netflix switchers. While BB just added a bunch a subs, it seems cannibalistic if anything. Total Access means Blockbuster can merely hold its own against Netflix, definitely not eat their lunch. Meanwhile, giving away free movies does not help profits; and after Blockbuster closes a round of stores Total Access will be less convenient for many. So we shall see if TA gets modified, etc.
Netflix is not flailing any time soon, and by showing this industry how to treat the customer, they changed the game. This is a Silicon Valley company that has extremely well done logistics and coding, not as easily copied as people are claiming, and much better suited for the digital future…
The new “Watch Now” service is an amazingly well done, and that shows us the continued innovation of this constantly doubted company will grant it continued success, in my opinion.
March 6th, 2007 at 9:32 pm
Blockbuster Online is having some serious distribution or computer issues. I returned my movie to their store on Feb. 23rd and haven’t had a movie ship since then even with over 100 movies in my Queue. They have serious issues.
Before going with Blockbuster over Netflix, I’d check out this thread:
http://wesleytech.com/blockbuster-total-access-problems/
If they don’t resolve the issues with their service by the end of my billing period, I will be a Netflix customer again. I only switched because turning the movies in at the Blockbuster store was very appealing, but if you never get another movie, the point is moot.
April 23rd, 2007 at 11:53 pm
Every time I went to the Blockbuster store they were asking me to sign-up… no thanks I said. Then I finally did and can only say with the new in-store return / exchange… IT’S OUTSTANDING! What was I freaking thinking! I’m on the trial for another week, but whoa I’m impressed. Got first 3 movies in, watched them and then headed over to the local store(s) for exchange on Friday night. Got 3 movies right off the shelf that I was interested in. Throw in the free video game rental (kinda pissed cause it used to be 2 per month… oh well can’t win them all) and then I’m out the door with 3 new movies and a video game for a BIG FAT ZERO $$$. Watched them and returned them today… guess what I just got my next 3 online rentals in today. Repeat!
All I can say is I’m blown away! The in store exchange really kicks butt.
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