Blockbuster heaves sigh of relief at Netflix rate hike

Netflix helped kill Blockbuster.

Its DVD-by-mail service, in conjunction with Redbox's 24-hour $1 rentals drove brick and mortar video store chain Blockbuster from market dominance into bankruptcy and near irrelevance.

So now that Netflix has had to raise its subscription rates, it's no surprise that Blockbuster, recently acquired by Dish Network, should want to capitalize on the negative feelings of consumers related to the rate hike.

The company this week announced a couple of new plans for the 1,700 physical Blockbuster video stores still located across the U.S, including 49 cent Sunday rentals and a $4.99 month-long unlimited rental pass for kids' movies.

They're relatively minor pricing changes, and the company's main benefit remains its 28 day advantage over Neftlix and Redbox for new releases. The video chain gets titles earlier because of its established relationship with Hollywood movie studios and their "release window" schedule.

Still, anything that can serve to lure defectors from a competitor is good business, and with NCR's exploding Blockbuster Express kiosk business potentially going up for sale after a licensing dispute with Dish Network, Dish has to do anything it can to get customers into Blockbuster stores to ensure success while its vital kiosk business gets worked out.

Update: Blockbuster sent out a memo on Thursday directly addressing Netflix defectors, offering customers who switch to one of Blockbuster's most popular DVD-by-mail plans a 30-day free trial and decreased monthly rate. After the free trial, ex-Netflix customers will continue to receive Total Access $9.99 per month for a 1-disc-at-a-time plan or $14.99 per month for a 2-disc plan. These plans originally cost $11.99 and $16.99 per month respectively.

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