Netflix cuts rates, Blockbuster closes stores

Posted Jun 29th 2007 8:00AM by Douglas McIntyre
Filed under: Consumer Experience, Competitive Strategy, Wal-Mart (WMT), Amazon.com (AMZN), Netflix, Inc. (NFLX), Blockbuster Inc 'A' (BBI)

Being in the DVD rental business seems to get worse by the day. Netflix (NASDAQ: NFLX) lowered the fee for its rent-through-the-mail service by $1 to match the new, lower price that Blockbuster (NYSE: BBI) is offering.

In a separate announcement, Blockbuster said it would close another 282 stores as renting DVDs through retail outlets becomes a less attractive business.

Netflix shares are near a 52-week low. off over 25% over the last year. Blockbuster's are down 15%. Perhaps that would send a message to the management at the companies.

Neither company has launched anything close to the Amazon (NASDAQ: AMZN) initiative to offer movies over the internet. Tivo (NASDAQ: TIVO) is a partner in that venture. Even Wal-Mart (NYSE: WMT) has launched a video download service.

Netflix and Blockbuster have simply stayed with their business models too long. They are not going to work in the digital age. They already show signs of not working.

Shareholders should hope that they get the message soon.

Douglas A. McIntyre is a partner at 24/7 Wall St.

Tags: DVD, Tivo, VOD

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Reader Comments (Page 1 of 1)

7-01-2007 @ 2:23AM

Fran Pipkin said...

Blockbusters wants too much for DVD rentals. We have a Family video store in our neighborhood and it is doing a booming business, and I can rent up to 5 DVD's for the price that Blockbuster wants for 1. I'll stick with Family Video.