Commentary

Dish and Blockbuster Keep the Retail Advantage Alive

Blockbuster

Netflix's oh-so public missteps and mea culpas regarding the split in DVD and streaming services has left a gaping window of opportunity for others to enter. Not only has the brand equity Netflix earned over the year been tarnished but there is enough confusion and recalculation going on among consumers about their monthly movie access to interrupt the inertia of subscription. In splitting its once-formidable value proposition in two, Netflix initiated on their own what most auto-renewable subscription services consider a nightmare scenario - having their members reconsidering a membership status that most people pay and forget about.

In the meantime Dish's Blockbuster takes advantage of Netflix's weakness with a Blockbuster Movie Pass bundle it is offering Dish customers for a $10 additional monthly fee. Wisely, the bundle includes a streaming movie service via the Dish set top box as well as a DVD and game mail rental. Dish is leveraging the 1500 Blockbuster stores it left open after its acquisition of the retailer by giving Movie Pass customers the ability to exchange the mail DVD/Games at the store. Sweetening the deal are 20 movie channels from the major studios such as Sony Movie Channel, MGM and Epix. On paper, of course, this looks like a strong rejoinder to Netflix's new deal. Dish/Blockbuster are trying to cover the available models whereby consumers choose to consume. They also insist that hi-def Blu-ray discs will not come at the additional monthly premium Netflix usually charges.

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Theoretically, Dish/Blockbuster seems to be targeting all of the Netflix soft spots. Scratch beneath the surface of this offer and you see the actual size of the streaming media library is 3,000 movies to the TV (4,000 to the PC). It is also unclear what tiered pricing there might be here for keeping multiple DVDs out at a time. While the DVD library is fair (100,000 discs) my recollection, as a former member of Blockbuster's mail rental service, is that they couldn't match Netflix's range. But worst of all, it is unclear if the retail brand, now under Dish's control, will ever extend its offer outside of the satellite provider. Why would they give another MSO's subscribers a reason not to switch? Even if the library gets pumped up, at some point Dish has to decide if it wants to use one piece of its business perhaps to undercut a competitive advantage the other side has. But so long as the offer is for Dish only, it doesn't represent much of a threat to Netflix. 

Still, the retail component, if played correctly, is an important piece for a large constituency. In my days with Blockbuster, having the ability to trade in a disc at a nearby retailer kept me on the brand's farm and out of Netflix for quite a while. The immediacy of an impulse rental and getting a new release on the day and date it is available are strong lures. Having a retailer credit your return immediately is also helpful. But let's hope Blockbuster learns from past mistakes. When they started playing games with the numbers of discs a member could return a month and then started re-configuring the offers regularly, they lost me. When buying into a movie service starts mimicking the complexity and conditions of choosing a Medicare plan, then it is time to hit the On Demand on your crappy cable box to see what's available for free tonight.  
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