Movie Rentals Biz Fast-Forwards

When you think about the fastest growing online businesses, what comes to mind? Chances are many of you included Netflix in your list. The company has revolutionized how we rent and watch videos.

I was a member for several years until recently. As I began to terminate my membership, it felt weird. The process was really wholly online. I guess as American consumers we are used to fighting the good fight with just about any service provider when it comes to any form of cancellation. We are smarter than them, anticipating all their last-ditch efforts. They tempt us with sweet talking, discounts, fee waivers and the like. Not Netflix.

For the most part, Netflix requires merely that you log into your account and cancel. The company does ask you a few exit questions--and that's it. I do have to say, the only trick was to go into my account setting and find out when my billing cycle ends each month. I was going to cancel in December, but I missed the deadline. The company has clear terms and conditions. I would have had to pay the entire month had I canceled a mere day after the billing cycle ended.

I canceled the following month. Why, you ask? Well I fit the bill as the perfect online video rental consumer: I plugged in my credit card for monthly electronic funds transfer (EFT) payment, I often forgot I had movies out for a month or so at a time, I kept the movies in their envelopes as I toted them to the office, to friends house, etc., thus building brand awareness. In the beginning I told just about everyone how cool Netflix was; toward the end, I spent a long time with the company's rating system selecting and rating movies I had seen, and I selected movies Netflix recommended I'd like based on my user preferences.

Sounds like a perfect relationship, eh? Well it wasn't. As the years went on, I found that the service stunk. I'd order a movie or (up to) three, and I'd wait and wait for them to appear. When I was finished with the movies, I'd put them in the mailbox the next day. Something must have been up with the system because I always got emails saying the company wanted to improve its service, and would I simply click a button and let the company know when I mailed the movie back.

As much as I wanted to have faith and support it, the online-to-offline process was flawed and often frustrating. Still as an online marketer and advertiser, I have to give Netflix credit for revolutionizing the way we rent, watch and rate videos. Until fairly recently, Netflix was in a league of its own. Then came Blockbuster.

Yes, Blockbuster. I know you think of them as the offline movie rental giant. I must admit my image of the company was quite dated. I remember Blockbuster being the only gig in town with a great quantity of videos. However, I also remember: Rushing there before everyone else on the weekend, scurrying around trying to figure out where the heck the movie really was, rushing back prior to 24 hours to avoid steep late fees, or even forgetting the movie next to the TV for over a week and getting jammed with $20, $30, even $50 dollars for the mishap.

That alone was fodder for compelling ad copy and a unique selling proposition for Netflix when it came out. No late fees? Ample movie selections in multiple genres? No dealing with store hours? Was this too good to be true? Did the company get too big too fast?

Well I am interested in seeing what Blockbuster will do with Total Access, the online rental program that allows customers to get additional DVDs in Blockbuster stores at no extra charge. It's been reported that the company will be spending $35 million on a Q1 marketing campaign to promote the program. According to CEO John Antioco, quoted in a recent Internet Retailer article, the company is also planning more multichannel renting options.

Get this, the $35 million was an add-on to the $20 million dollars earmarked this past November for the launch. Looks like it paid off. Blockbuster, Inc. was able to yield 700,000 new customers from Nov. 1, 2006 to Dec. 31, 2006. Those are some impressive numbers! However, the company will not only need to be creative and compelling in price. It must also be completely customer service-oriented in order to catch up to Netflix's 600 million customers. I think the idea of being able to rent online and return by mail (like Netflix) or the store will convert many Netflixers.

Sounds like one of the coolest pieces of business to work on nowadays. The challenge is a good one. I think they can do it. What do you think? Have we as consumers grown out of the online-only model? Or does the process fall down when we have to deal with the good ole U.S. postal service? Is walking into a store really a better option? Post to the Spin blog and tell us how you think the online movie rental business will fast-forward.