Blockbuster offers online rentals for $15.99 for 6 months

November 10, 2004

According
to a reporter at The Motley Fool, if you try to cancel your
service with Blockbuster during your initial two-week trial period, it sets the
webpage into a bit of a tailspin. First, they want to know why you are
leaving and politely ask you to stay, then sweeten the deal with a special
offer. Specifically, a six-month membership for the standard
three-movies-out-at-once option for $15.99, complete with two monthly in-store
coupons for free movie and game rentals, or an offer for one month free.

Even as a regular Netflix subscriber, I couldn't help
but be impressed with Blockbuster's resilience. (In comparison, when I
sampled Wal-Mart's service a year ago, they let me cancel with nothing
more than a polite goodbye.) If Blockbuster is to survive, the company
needs to get accurate data on reasons behind customer churn. Although this
is a pretty expensive attempt at data collection, it's hard to see how
Blockbuster has any choice in the matter. Its business model is under
heavy attack -- especially if Amazon.com joins the fray-- and the company
has to retain customers, even if it means handing out a month of service
for free to people who wanted to leave.

As the above quote indicates, this is part of a market
research effort to determine why people would like to switch to another rental
program. But, we see that for the past month or so, the online rental
market has gotten very aggressive on pricing. Right now, even though this is not
an advertised special, we have to give the Crazy Eddie discounter
award to Blockbuster with this promotion. Hello Wal-Mart, what do you think of
this action?

Source: The Motley Fool