I am currently a Blockbuster Online customer and have been a Netflix customer in the past. I have generally preferred Blockbuster because of the two free in-store rentals with the service. However I was disappointed that the stores and the online service were not integrated as well as they could be and IMHO should be. With Blockbuster’s announcement that you can exchange online rentals in stores, my wish is now granted. This will make me a loyal blockbuster customer with no reason to switch to Netflix.
Over the last few months Blockbuster has also significantly improved its mailing system (atleast where I live) and I actually get DVDs in a day. The only problems I now have with Blockbuster are minor website related issues (which are not yet solved in the new Blockbuster online). For example the Top 10 rentals are useless because I see the same ones every time. Top 10 for this week would be nice. New releases are hard to find and badly organized. So I generally use Yahoo! Movies to get recommendations.
Enough about Blockbuster inc, what is Netflix inc upto?? Netflix ofcourse has a better web interface and is working hard to come up with better recommendations, which can be seen by the Netflix Prize offer. How can Netflix compete with Blockbuster’s in-store offer? My suggestion would be Mall Kiosks, like Dell has stared in several malls.
So how are the stocks doing? As of now (Nov 7), NFLX P/E is 26 and BBI P/E is 16. Netflix has so far managed to garner far more customers per quarter than Blockbuster and has about thrice to four times as many subscribers. It would seem that Blockbuster’s new offer will attract the worst kind of customers the most – the ones like me who watch atleast three movies a week. Inspite of that I personally feel that the bold move from BBI is a great decision. Which would I invest in – Blockbuster or Netflix?? I would have to say neither even though I like to invest in companies whose products I like and use or whose stores I frequent. I’m worried the whole online rental industry might shrink if movies on demand on cable catches on. Unlike some others, I’m not a big fan of movies on demand online however. We are still not at the stage where an integrated computer/TV/Entertainment system is very common or can work for the masses. However, if I were forced to select one it would be BBI thanks to their new all access offer.