Netflix Cuts Prices Again; DVD Rental Price War in Full Effect

Wed Jul 25, 2007 4:40PM EDT

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Netflix is cutting the price on its most popular service, the three-discs-at-a-time rental plan, to $16.99 a month, matching Blockbuster in what is shaping up to be a bitter, grueling price war for both companies.

Netflix's prices are now exactly in line with Blockbuster's mail-only service. Both companies have a $13.99 plan (two movies at a time) and an $8.99 plan (one movie at a time). (Blockbuster's "Total Access" plans are a dollar more and allow for in-store disc exchanges as well.)

Netflix stock has been hammered as a result of this and earlier price cuts. You can now buy a share of NFLX stock for less than the three-disc monthly subscription fee. Yow.

Has Netflix's rental model begun to stagnate? With 6.8 million subscribers as of March, analysts are suggesting that the company doesn't seem to be growing any further and may in fact be sliding backwards as customers head elsewhere. Meanwhile, Blockbuster has been growing its online service immensely, now boasting 3 million subscribers vs. 1.5 million in late 2006.

Business aside, the question that might ought to be asked is not whether Blockbuster or Netflix will win this battle, but whether the era of DVD rentals is beginning to come to a close, with online video becoming a more and more viable alternative. Even Netflix itself has gotten into online video lately, with a well-received streaming video platform (included in your subscription fee).

Are you still renting DVDs (and if so, from which company?), or have you started the great migration to online?

Comments on Netflix Cuts Prices Again; DVD Rental Price War in Full Effect

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  • 6 Posted by cnull on Thu Sep 3, 2009 3:27PM EDT Report Abuse

    theyowman - The usage in my comment was just a joke. In the article, it's meant merely as a general exclamation of surprise. Cheers.

  • 7 Posted by jirojas on Thu Sep 3, 2009 4:35PM EDT Report Abuse

    Using Netflix's 2 at a time plan. No problems so far. I would hate for Netflix to go kaput. Competing markets is the best thing for us customers, that means freedom of choice. The last thing we need is one company owning all of the movie rental market.

  • 8 Posted by nomij@sbcglobal.net on Thu Sep 3, 2009 7:40PM EDT Report Abuse

    I like Netflix and in particular I like their Online Video that you can watch without delay. It works great and video quality is very nice. If they charged me a fee for it, I would pay it..."IF" they would put some quality videos up to watch. Pretty much old stuff as is, but some entertainment. I think they are missing the boat on this service. Say 5 hours is worth $2? I don't know...but they could make money with it. I am sure that copyrights come into the equation at some point, but still they better get moving before someone else steals the idea...like maybe Blockbuster? Which they have zero creativity. They are just copying Netflix in my opinion. Netflix should stop defending and start attacking with new ideas. Thats how I run my web business. Big companies like blockbuster can't react fast enough, and have (like I said) zero creativity, so they just die on the vine.

  • 9 Posted by matt_archbold2002 on Thu Sep 3, 2009 7:11PM EDT Report Abuse

    I had netflix for a couple years, and i loved it. But when i heard of blockbuster introducing the "Total Access" package, i switched. Not because i grew tired of netflix, but because i felt that the ability to go to blockbuster with one of my online rentals and grab another movie without waiting was great. I have been with blockbuster for about 6 months thus far and have used that service at least once every couple weeks. Not having to wait for a movie to be mailed back, and another one sent out is great.

  • 10 Posted by faerie_dragon@sbcglobal.net on Thu Sep 3, 2009 3:57PM EDT Report Abuse

    I'm a Netflix subscriber and I like their service. I also like the ability to instantly watch a movie online. My one complaint about that is the selection of movies available for online viewing are very weak. Most of them are low rated movies of 3 stars or less. Very few of them are premium movies. Thus I don't use that service as often as I would like to. Netflix has always been great about handling problems. They send out a replacement DVD before they get the bad disc back. I was thrilled to find they dropped the price of their service. I wasn't planning on changing. So far the only thing I've seen that Blockbuster has over Netflix is the ability to buy 3 and get one free from their used DVDs. Having a physical store to go into can be a benefit if you like shopping that way, but I like the preview of the DVDs Netflix has for show. It lets me decide whether I want to watch the movie before I put it in my queue. I agree with nomij that Netflix needs to do some creative marketing. In fact, I think I'll look for feedback on their website and suggest that to them.

  • 11 Posted by gambitpen@sbcglobal.net on Thu Sep 3, 2009 4:05PM EDT Report Abuse

    i have blockbusters total acess and its the best thing. i have the 3 at a time plan and ive seen a whole lot of movies with it. when im done with all 3 movies i go in to blockbuster and pick 3 up for free while another 3 are beign shipped it gives me something to watch while im waiting. it can be overwhleming at times but im a movie freak so its ok with me. having movies all the time is a great thing if you love movies

  • 12 Posted by gambitpen@sbcglobal.net on Thu Sep 3, 2009 4:05PM EDT Report Abuse

    i have blockbusters total acess and its the best thing. i have the 3 at a time plan and ive seen a whole lot of movies with it. when im done with all 3 movies i go in to blockbuster and pick 3 up for free while another 3 are beign shipped it gives me something to watch while im waiting. it can be overwhleming at times but im a movie freak so its ok with me. having movies all the time is a great thing if you love movies

  • 13 Posted by alundregan on Thu Sep 3, 2009 2:51PM EDT Report Abuse

    Long time Netflix fan. I feel like I never have to wait long for movies, so being able to go in to a blockbuster doesn't appeal to me. Also, not a big fan of blockbuster. I feel like Netflix has a better selection and I don't have to worry about any hidden late fees.

  • 14 Posted by shellyejo on Thu Sep 3, 2009 9:19PM EDT Report Abuse

    I have the $16.99 plan from Netflix and I love it. Getting to keep the movies as long as I need to is nice. I've never been a fan of Blockbuster (Since they had issues with unfair practices involving their late fees years ago.) So that's why I chose Netflix. I was renting from Hollywood Video previous to signing up with Netflix, but they went from 5 day rentals to 2 day rentals for the same price. It was a pilot program at our local store, but after two months they couldn't tell us when or if it would end. I like to rent several movies at a time and having to go back every two days was an inconvenience.

  • 15 Posted by jairaj on Thu Sep 3, 2009 4:27PM EDT Report Abuse

    Netflix all the way. Tried the free Blockbuster trial and didn't like the web interface, there is a lack of community and peer reviewed movies (may have changed). In terms of content Netlix has more indie movies than blockbuster which tends to favor major studio productions. In terms of foreign movies specially Indian movies, whichI watch, Netflix is almost like an Indian video store with them even listing old and obscure titles, Blockbuster doesn't even come close. I would gladly pay a premium to stay with Netflix.

  • 16 Posted by jonestim7 on Thu Sep 3, 2009 4:40PM EDT Report Abuse

    I used Netflix, switched to Blockbuster. Thought the Total Access deal was counter productive to my original reason for getting DVD's online. (I hate walking around the DVD store). I switched back to Netflix but now have cancelled because I can get the DVD's I want at the library or on Showtime or HBO or Pay per view or On Demand. I think if Apple TV gets rental downloads I will go that route.

  • 17 Posted by kaikhor on Thu Sep 3, 2009 4:46PM EDT Report Abuse

    I have Netflix 2 at a time plan and have no plans to change. Although the wait can be tiresome (we don't have cable, so are then watching our own, small collection), going to Blockbuster and dealing with our local store is a major pain that I try to avoid at all costs. I'll wait a few days and not deal with the headaches, thanks.

  • 18 Posted by michael_w_anderson on Thu Sep 3, 2009 7:18PM EDT Report Abuse

    When Netflix first came out, it was better than sliced bread. I was a customer for 2 or 3 years. Then, they fell into using their "distribution frequency" algorithm and started spreading out my shipments to slow down my use. I quit them and did a free trial of Blockbuster's total access package. While I did find the combo of shipping and being able to exchange movies at the store interesting, it didn't seem worthwhile to continue as I thought Blockbuster's website was poorly executed and their selection not as good as Netflix. Maybe I'm just burnt out on movies, but I didn't sign with Blockbuster either. However, back to your blog. I think the Netflix model is outdated compared to the Blockbuster Total Access package. If Blockbuster can come up with online downloads they'll be eating Netflix's lunch in no time. No wonder the Netflix stock is down. Someone came up with a better mousetrap.

  • 19 Posted by cat.woman50 on Thu Sep 3, 2009 3:19PM EDT Report Abuse

    I have Netflix going on 2 years now and love it! Their selection is, hands-down, much more eclectic than Blockbuster. My tastes tend to run towards the obscure, which Neltflix can handle. The main reasons for joining were selection and not having to go into a store every few days for my movies. The last thing I want to do is go back into a Blockbuster store again! As to video online, I would rather have DVD in-hand to play wherever I like and to keep as long as I like. I believe with online video you only have so many days, 2 or 3?, to access the movie and, of course, can only play it on your computer. I average 12 movies per month, so, I'd say Netflix is working out fine for me.

  • 20 Posted by mastergrey42 on Thu Sep 3, 2009 7:10PM EDT Report Abuse

    I am a couch potato, so the option of going to a store to trade in my movies doesn't excite me me. I'm on the Netflix 8-at-a-time plan, so movies are always cycling in and out. No worries. ~~ Grey

  • 21 Posted by red_cloud42 on Thu Sep 3, 2009 8:34PM EDT Report Abuse

    i have no qualms about the price of rental with either company. after all a couple of dollars isn't gonna break the consumer or make the company. i think downloadable movies is the wave of the future. so far we have netflix downloads and movielink to name two. netflix is fast and reasonably priced and movielink is incredibly slow. what do they have in common? they both have the worst selection of movies imaginable! if SOMEONE would figure out a way to get a decent selection i would be their first coustomer, but when i have to pay good money to download old outdated and just plain bad junk, that'll be the day!

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