Netflix and Blockbuster face off in the video-rental arena with Netflix unveiling a new payment plan that will increase subscription rates by as much as 60 percent–drawing a counter offer to consumers from Blockbuster.
On July 12, Netflix announced a price hike that would almost double prices for both current and new subscribers of various plans available from the company.
The previous $9.99 a month unlimited DVD rental and Internet streaming combination will no longer be available to current customers after September and new customers as of the announcement date also do not have access to the plan.
The company’s new payment plan divides the Internet streaming and DVD mail delivery services into two separate plans, charging subscribers a rate of $7.99 for each service.
The recent restructuring of the pricing model sparked an immediate response from Blockbuster in a recent press release openly aiming for Netflix customers.
Capitalizing on Netflix’s decision to increase prices, president Michael Kelly announced the company would launch a limited time, nationwide promotion for all Netflix customers who switched to Blockbuster’s Total Access plan.
The campaign offers Netflix customers a free 30-day trial of Blockbuster’s signature plan. When the trial concludes, customers have the option of continuing to receive Total Access for an adjusted price of $9.99 per month for one DVD at a time or $14.99 per month for two DVDs at a time.
“Blockbuster quickly responded to the cries of Netflix customers,” said Kelly. “Blockbuster Total Access is Netflix without the wait. The combination of DVDs by mail and unlimited in-store exchanges provides more than 100 million people living near Blockbuster stores immediate convenience and unparalleled choice.”
Customers voiced their contempt for the doubled subscriber rate from Netflix, venting their frustration with the company over social media sites such as Facebook and Twitter.
Netflix’s announcement on Facebook generated over 80,000 comments from subscribers, several writing, “Goodbye Netflix, hello Blockbuster.”
Rather than canceling their service completely, the majority consensus has been to drop the DVD by mail portion and continue the instant Internet streaming.
“I’m not happy with the price going up,” said Netflix user Armando Gallardo. “I will surely cancel the DVD by mail part and stick to streaming. [Netflix] is still more convenient than anything else though.”
The strength of that instant streaming service has turned out to be the primary reason why some customers are remaining Netflix subscribers despite their outrage.
“If Blockbuster offered instant streaming I would switch services in a heartbeat,” said Netflix user Greg Murphy.
The business rivalry between Blockbuster and Netflix was previously established between the two video-rental companies on the assertion that Netflix has been a primary cause of the dismantling of traditional video-rental stores.
Blockbuster was financially pushed to the breaking point and went on sale in a bankruptcy auction in April 2011 with Dish Network Corp purchasing the company for $320 million.
Prior to filing for bankruptcy the company had established nearly 3,300 video stores across the United States.
Dish Network Corp currently maintains 1,500 of these stores, according to Forbes.
