McKinney, Texas -
announcement this week that it is separating and raising prices on its previously combined streaming video and mail-based disc rental services, drew a few opportunistic counter offers from rival Blockbuster, which is now owned by the Dish Network.
Blockbuster revealed on Thursday that it is offering "outraged" Netflix customers a special one-month free trail running through Sept. 15, 2011 at participating stores and via its web site. The offer applies to its one- and two- disc-out-at-a- time rental packages.
After the free trial, customers will continue to receive the Blockbuster Total Access by mail service for a new $9.99 per month price for "one disc" at a time or $14.99 per month for "two discs" at a time. Blockbuster also pointed out that it provides access to new releases up to 28 days or more prior to either Netflix or Redbox, and offers in-store exchanges for its by- mail rentals for people living near a Blockbuster brick-and-mortar outlet.
On Tuesday, Jessie Becker, Netflix marketing VP, posted a new rate change notice on the company's website outlining its plan to separate the current combined DVD-by-mail and streaming video services that had been available at monthly fees starting at $9.99 per month.
Effective immediately for new subscribers and on Sept. 1, 2011, for existing subscribers, Netflix will charge $7.99 a month for a one DVD out at-a-time plan and $11.99 a month for a two DVDs out at-a-time plan.
The now-separate unlimited streaming plan carries a $7.99 per month (no DVDs) fee. Netflix subscribers can also elect both the unlimited DVDs, one out at-a-time (no streaming), plan and the $7.99 a month unlimited streaming plan for a new price of $15.98 per month, a $6 per month increase over the prior combined plan.
In addition, Netflix has set up separate management teams to handle DVD by-mail and the streaming video services.
In a blog, Becker said Netflix instituted the changes because it had underestimated the level of demand for DVD rentals after the streaming service was available. The company only assessed $2 per month for one- disc at-a-time DVD rentals in the prior $9.99 per month pricing structure.
"Given the long life we think DVDs by mail will have, treating DVDs as a $2 add on to our unlimited streaming plan neither makes great financial sense nor satisfies people who just want DVDs," said Becker. "Creating an unlimited DVDs by mail plan (no streaming) at our lowest price ever, $7.99, does make sense and will ensure a long life for our DVDs by mail offering."
The announcement reportedly drew cries of outrage from disgruntled Netflix subscribers, which Blockbuster seized upon in its latest bid.
Prior to the Netflix price hike, Blockbuster instituted several other promotional offers to entice Netflix users over to its service.
Among those were: a month long pass for $4.99 for kids to rent unlimited kids movies from Blockbuster stores.
- Sunday movie rentals for 49 cents at Blockbuster stores.
- In-store rate and daily pricing reductions, with thousands of titles available for rent for 99 cents per day
- Newly released movies were lowered to $2.99 for first day. Other newer movies were lowered to $1.99 or less for first day, with additional days at 99 cents.
Blockbuster's By Mail service enables customers to exchange movies at participating Blockbuster stores nationwide for another free rental.
Interested customers can visit the Blockbuster website at
or bring a tear-off from a Netflix mailer to a participating Blockbuster store to register.
Blockbuster pointed out that customers have access to unlimited game titles in stores, in addition to DVD disc rentals with immediate release windows, unlike Netflix and Redbox with up-to-28-day release windows on some new titles.
Blockbuster also offers a transactional on-demand digital download service on over 125 different CE devices from set-top boxes t PCs and mobile phones, offering rentals and sales of digital movies and TV shows. It does not offer a subscription-based instant streaming movie service comparable to Netflix at this time, but the Blockbuster on Demand system enables playback via streaming and download, depending on the device in use.
Blockbuster does not offer a combined subscription for its on demand and By Mail service today. According to Kevin Lewis, Blockbuster's chief marketing officer, the separation of its digital download and disc-by-mail programs is necessary due to the transactional model for the download service (in contrast to a subscription streaming model), which allows Blockbuster to access movies with the earliest release windows.