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.

After six months of steady gains, Q4 earnings season is upon us. This means that message boards are aflutter with insider tips about which retailers knocked the ball out of the park in Q4 and which ones, well, whiffed. Over the course of the last three weeks, people went to the finance forums at Yahoo!, MSN or AOL more than 6 million times to get the scoop on what to expect during the earnings calls. The most recent two weeks had the most visits we’ve seen since we started monitoring this last year.

All of this activity reminds me of last year’s heated debate about AMZN’s earnings between Warren Buffett (handle: richierich) and Anthony Noto (handle: goldman860) on the Yahoo! Finance message boards. Umm, just kidding.

Hey, I love consumer-generated content as much as the next person, but why rely on amateurs when you can get cold, hard data from Compete? For the first time, we are releasing data detailing the number of online transactions for the top retailers during the 2006 holiday shopping season. One of the things that we do at Compete is dissect clickstreams so we can track when people in our panel buy something at the sites they visit. Based on this, we can estimate how many purchases are made across the top retail sites. And we’re releasing these figures before these retailers announce their Q4 revenues and earnings. Compete Blog readers, analysts, fund managers and daytraders rejoice!

Note: estimates are based on Compete’s panel of US consumers and cover online transactions only.

Some highlights that we found interesting:

• Purchases across the top sites increased 27% versus the same period, in-sync with Q4 online spending projections from the online commerce experts at Forrester.
• Amazon is still the reigning king of holiday e-commerce with over 20 million online purchases; while web traffic at Walmart is closing in on Amazon (40.7 versus 57.8 million million in December), Amazon completes nearly 8 times as many transactions.
• Holy December Best Buy! After running in parallel with Circuit City for the prior twelve months, Best Buy kicked in the afterburners and posted a big December.
• Warm weather impacting flannel pajama sales? While L.L. Bean and Lands End both showed strong year-over-year gains in December web traffic, neither company increased online transactions.
• While Vista Print and Kodak Gallery won the battle for web traffic among online photo sites in Q4, Snapfish won where it counts – in getting people to buy on its site. And unlike the other sites, transactions per person ramped up nicely throughout the quarter, too.

So go ahead start that hedge fund you’ve been thinking about; buying your first Hinkley may be closer than you think.

Stay tuned through the end of the month for a deeper look into the battle between NFLX and BBI, and for hot off the presses January data covering DIET, NTRI, and WTW. And if you want to receive more data like this going forward, feel free to email me at sdimarco@compete.com or leave a comment here.

Get SnapShots of sites mentioned in this post:

• amazon.com
• bestbuy.com
• circuitcity.com
• homedepot.com
• jcpenney.com
• kodakgallery.com
• landsend.com
• llbean.com
• netflix.com
• overstock.com
• radioshack.com
• sears.com
• smartbargains.com
• snapfish.com
• target.com
• toysrus.com
• vistaprint.com
• walgreens.com
• walmart.com

A few quick facts for you:

• 75: The number of days Compete.com has existed
• 150,000: Visitors to Compete.com
• 300,000: SnapShot views requested since launch
• 40,000: Unique domains that have been analyzed on SnapShot

40,000 domains!!! As you can imagine, we asked ourselves, “what sites are people researching the most” – below are the Top 10 most analyzed domains on SnapShot.

There are additional words on our post launch performance from our CMO and others in a press release we sent out today. Click here to read more.

If you have not logged into Stickam.com, it’s probably because you are not a teenager. The New York Times recently reported that Stickam, a new social networking site, has around 50,000 registered users who are between the ages of 14 – 17. For those that are not familiar with Stickam, it is essentially MySpace with Web cameras. Members converse with friends and potential friends via real time video feeds. Obviously there are some concerns and controversies surrounding this site. Inevitably, the combination of young people and web cams equates to some trouble.

But, you have to do something different to take a piece of the pie from the giants like MySpace and Facebook, right? So will Stickam become a major player? Thus far they have seen impressive growth in monthly unique visitors since January, 2006.

Although it may not be catching on at the rampant pace that sites like MySpace and YouTube did, Stickam is no slouch.

But, what about engagement? The whole success of the social networking phenomenon relies upon users spending significant time adding content to their own profiles, reading other’s pages, and browsing new faces. When comparing the average time spent at the top social networking sites we found that stickam is lagging well behind.

Although Stickam is still new, it appears to not be as ‘sticky’ as other social networking/Web 2.0 sites. While the average MySpacer is “Online Now” for almost 28 minutes, Stickams visitors are “Live” for less than 8 minutes.

There you have it, Stickam, the new kid on the block, is attracting visitors but does not seem to be successful in engaging people to spend a significant amount of time. Perhaps at this point we are all social networked out.

Get SnapShots of sites mentioned in this post:

• stickam.com
• myspace.com
• youtube.com
• friendster.com
• facebook.com

From the desk of Compete’s Wireless practice.

With a first glance at holiday shopping behavior, there seems to be a fertile opportunity for the much anticipated iPhone. With over 33% of all wireless phones now being music enabled, Compete found that holiday interest in music phones made up over 53% of all December cellphone shopping interest. There were just over 3 million total music phone shoppers in December, and almost as many iPod shoppers, with 2.7 million consumers evaluating iPods online, something that would seemingly signal a perfect opportunity for a peanut butter and chocolate combination.

Surprisingly, through Compete’s unique perspective of online behavior, Compete found that only 5% of all cellphone shoppers also evaluated an iPod in December, and only 3% viewed both a music phone and an iPod.

This lack of overlap illustrates the clear delineation that currently exists between music players and cellphones, the very gap the iPhone is hoping to bridge. One way to do this is to focus on the current iPod segment, especially since among consumers who shopped for both an iPod and a cellphone, 63% of those cellphones were music enabled.

When Mr. Jobs announced his intention of selling 10 million iPhones in 2008, you would think the current iPod community is ripe for the picking. Maybe, but break out the iBates. Even among the diehard segment of iPod shoppers who said they are very likely to buy an iPhone, only 6% said they would pay over $400.

A week after the historic announcement of the iPhone, Compete behaviorally targeted online iPod shoppers to get their take on the supposed must-haveware. 75% of these iPod shoppers had already heard of the iPhone, and a healthy 20% said they would postpone their next cellphone purchase to wait for it. 20% also said they would postpone their next music player purchase, not bad for a device unavailable for the next six months.

What does this mean for the carriers? The good news for Cingular is that 12% of iPod shoppers said they would be very likely to switch carriers to get the iPhone. The bad news is that of the people who are not willing to switch, over 30% cite Cingular’s service plan pricing, and another 35% cite Cingular’s coverage. Of the people not likely to switch, almost 40% said they had no interest in purchasing a combination music player and phone, and over 55% said their current carrier has cellphones that meet their needs.

It is clear that Apple and Cingular are targeting a niche market with a higher priced, dual threat device, but the biggest barrier remains the price. As the RAZR and the recent influx of consumer oriented smartphones have proven, the magic number seems to be closer to $200, or a couple hundred free iTunes.

For more information please email wirelesspractice@compete.com.

Get SnapShots of sites mentioned in this post:

• apple.com
• cingular.com
• itunes.com

It was the year 2000, and I was in love. It wasn’t another supermodel or a figure skater, but a website for audio books called Audible. You see, I had been an avid reader for most of my adult life, but I was working full time and going to b-school at night, so my busy life left me starved for pleasure reading. Then Audible walked into my life.

Audible’s library of daily news and audio books provided me an easy way to pass myself off as “well read” and I, and many others, cheered. However, internet years are like dog years and Audible appears to be growing old. The rise of podcasts, satellite radio and video integration across handheld devices is taking the wind out of Audible’s sails.

Site traffic is down 39% year over year which corresponds to a 40% decline in Audible’s stock price.
One of Audible’s biggest problems is that it can’t get its members to spend more money. Its executives talk about this issue in the Q3 earnings call and Compete data corroborates.

I have to be honest, I’m not helping. I’ve let my subscription lapse because my life has changed and it’s no longer worth the 5 minutes it takes to download the news or browse for more books. I’ve tried everything – even the wireless application that lets me download content over the air, but it just hasn’t been worth the hassle. Maybe Apple’s new iPhone will make it so easy to get fresh content on my handheld device that I’ll reconnect with Audible.

I hope so.

I miss Audible. I’ll have to give her a call sometime.

Get SnapShots of sites mentioned in this post:

• audible.com