Blockbuster and Netflix Take Their Competing Models Online
Posted by: Stephen Wildstrom on November 25, 2008
Blockbuster and Netflix have very different visions of how the residential movie distribution business works in the physical world. Netflix customers pay as little as $5 a month for as many DVDs as they want to watch, the different prices determining how many disks they get at a time. although it has a relatively small Netflix-like offering, Blockbuster relies primarily on rentals from its brick-and-mortar stores, where customers pay for each title they watch.
Now the two companies are moving their warring business models online. Netflix has offered subscribers unlimited streaming at no extra charge to computers for some time, but has been moving into the living room by providing the same service on TiVos, the Xbox 360, and a $99 dedicated Netflix box from Roku. Blockbuster is partnering with 2Wire, which is providing an Internet-connected set top box to provide online movie rentals.
The 2Wire MediaPoint costs $99, but comes with a credit for 25 movies, meaning the hardware effectively is free. After the initial credit is used,customers will pay for each rental with prices starting at $1.99 for older titles. As is usual for online rentals, customers can watch a title within 30 days of renting it, but the rental expires 24 hours after it is first played.
The subscription vs. rental shootout isn't a straight-up fight due to restrictions imposed by the studios. The Netflix streaming catalog of about 12,000 titles is weighted heavily toward older titles and relatively obscure independents and foreign films. Blockbuster gets new movies in the online rental window, which provides for a much greater availability of near=-current titles, but fewer classics.
The studios still locked into complex distribution contracts that impose all sorts of temporal and geographical windows on who gets what content when. Until that changes, consumers will continue to face a confusing situation where different titles are available at different times from different online providers.