Why Netflix is Beating Blockbuster

[Chris Gohlke]

<div class='os_post_top_link'><a href='http://www.livedigitally.com/2008/12/13/why-netflix-is-kicking-blockbusters-e-butt/' target='_blank'>http://www.livedigitally.com/2008/1...busters-e-butt/</a><br /><br /></div><p><em>"While I&rsquo;ve always liked Netflix, I&rsquo;ve remained dubious as to their potential for long term success. Even when they hit their first million subscribers I thought little of it. From my perspective, with tens of millions of customers, I figured sooner or later Blockbuster would just wipe out Netflix&rsquo;s market share and opportunity. Instead, Netflix is en route to 9 million subscribers, and I&rsquo;m more than a little surprised. A conversation last night with a good friend of mine helped me understand why this is happening. It&rsquo;s a few parts Innovator&rsquo;s Dilemma, and a few parts just plain bad business. It&rsquo;s a Cinderella story. Outta nowhere."</em></p><p>Earlier this year I <a href="http://forums.thoughtsmedia.com/f303/dear-blockbuster-90113.html" target="_blank">posted why I left Blockbuster</a>.&nbsp; The above article has a nice business analysis of why Netfilx is kicking Blockbuster's butt.&nbsp; While I agree with the article, Netflix success comes down to management actually understands the customer and is proactive in making sure the customer has a positive experience.&nbsp; While my experience with Blockbuster was riddled with periodic frustrations that piled up until they broke the camels back, Netflix has been smooth sailing.&nbsp; When I mail back a DVD, I get a new one two days later.&nbsp; Their streaming works great.&nbsp; When they have had problems, they've been proactive about informing the consumer and liberal about providing credits with waiting for the customer to complain.&nbsp; Their pricing is more than reasonable, especially if you make liberal use of Watch It Now and even though their is a surcharge for getting Blu-ray, $1 additional per month seems more than reasonable considering that Blu-ray disks cost more than DVDs.&nbsp; (Side note:&nbsp; I broke down today and bought a Blu-ray player and added Blu-ray to my Netflix account, my HD-DVD player is sitting in the corner sulking.)</p>

[Rob Alexander]

I never understand this discussion. I started with Netflix and they were horrible. They would hold up my movies, making sure that I could only get a few a month... hardly the way to 'understand' their customer, though I guess you could call it 'proactive'. Remember, this is the company that admitted to throttling to prevent people from exceeding a certain number of movies in a month. They continued doing it until they were forced to cease as one of the terms of settlement in a class action lawsuit.

When I moved to Blockbuster, it was a huge improvement and they've been nearly perfect ever since. My average turnaround on a movie with Netflix (I started keeping track when I started suspecting they were cheating me) was 6 days with some turnarounds running as high as 9 days. With Blockbuster, it has been reliably three days for a couple of years now. The distribution centers for both companies are in the same city, two hours drive (one day's mail) away.

It seems fashionable right now in online communities to rag on Blockbuster, but my experience couldn't be more different than what is characterized in that article. In my book, my good experience is worth just as much as his bad one. I'll stay put, thanks.

[doogald]

Funny, maybe once every three months I'll have to wait for a turnaround longer than 2 business days from Netflix.

The nearest Blockbuster to me is a 25 minute drive, Netflix allows me to create four profiles so that each of us here can manage our own movie queues, it is almost always a 2 day turnaround, and now streaming movies to boot. I have no reason to switch, either.

[Chris Gohlke]

I had Blockbuster for probably close to two years. Their turnaround time got progressively worse. I was returning movies to the store and it was still taking 3 to 4 days to get the next one, and that was IF the store checked it in properly, which was 50/50. If they did not check it in, it was a crapshoot regarding when it would arrive back at the distribution center and be checked in.

In the months I've been on Netflix, without fail, I drop one in the mail and get a replacement 2 days later.