Blockbuster Challenges Netflix

May 30, 2002

Blockbuster CEO John Antioco hints that the company might be considering an all-you-can-eat DVD-rental offering to counter similar services offered by Netflix, reports Business 2.0. Depending on the program, Blockbuster customers will be allowed to hold on to two or more movies for at least a month without having to pay late fees.

Netflix, which recently completed a successful IPO, is looking to broaden its reach nationally. Currently, the DVD rental site has eight fulfillment centers across the country although the largest concentration of its customers live in the San Francisco Bay area.

According to Blockbuster spokesperson Karen Raskopf, its studies show that most customers make movie-renting decisions based on impulse. If consumer demand indicates that a direct-mail option would be desirable, Ms. Raskopf says that the company’s several thousand U.S. locations could serve as distribution points. Blockbuster claims to have locations within a 10-minute drive of 64 percent of the U.S. population.

Moderator Comment: Does Netflix pose a serious threat to Blockbuster in the DVD rental market?

We first learned about Netflix while working on a story
about Bashas’ home delivery program in Arizona. One of Bashas’ happy consumers
sung the praises of the Netflix service as if she was being paid by the company.
That was two years ago. Now, the only time we enter a Blockbuster is when we
get a gift card from someone as a present. [George
Anderson – Moderator

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