Blockbuster Online has just expanded their Online Rental options. They have 6 plans, as shown in the chart here:

[price chart for Blockbuster Online]

Apparently they just introduced the “Blockbuster By Mail” which offers a $1/month savings if you are willing to give up the in-store exchanges.

I am at a complete loss to figure out why they would offer such a plan. My guess is that they have gotten some kind of complaint from people who either a) don’t live near a Blockbuster store or b) don’t want to return movies to the store. Blockbuster is doing the right thing by offering them a deal, although $1 is probably not going to make any of them very happy. So why do it? My only guess would be the “Shut Up” factor, where they can shut people up who have complained about this by pointing to the fact that they offer a discount for people who don’t want to drop off movies at the store.

Why is the 4 DVDs at-a-time subscription so expensive?

As soon as I saw the $24 price tag for the 4-DVDs at-a-time plan 1 I thought it looked way too high. After all, the difference between 1 at-a-time and 2-at-a-time is only $5 ($10 vs $15), the price between 2 at-a-time and 3 at-a-time is only $3 ($15 vs $18). Why does the price between 3 at-a-time and 4 at-a-time jump $6 ($18 vs $24)? About the only good answer I can offer is because it’s the same price Netflix charges. Here is Netflix’s published list of subscription rates (only the unlimited plans shown here):

  • 1 at-a-time = $10
  • 2 at-a-time = $15
  • 3 at-a-time = $18
  • 4 at-a-time = $24
  • 5 at-a-time = $30
  • 6 at-a-time = $36
  • 7 at-a-time = $42
  • 8 at-a-time = $48

Again, once you pass 3 at-a-time, it will cost you $6 more per DVD.

Given the $5/$3 scale that we see going from 1 to 2 to 3 at-a-time, I’d expect that the price for 4 DVDs at at time would be no more than $21.

Plans like this follow a usual pattern: the higher up the scale that you go, the better the deal. $20/month for 4 DVDs at-a-time would actually be where I would like to see the 4 at-a-time price point.

Blockbuster could sweeten the $24/month plan in a way that Netflix can’t: add a second E-coupon for free in-store rental of a video game or DVD.

At these prices, Netflix and Blockbuster seem to be pushing customers towards the 3 at-a-time plan. I guess the question is: Why?

Why don’t they want to attract more customers to the 4 at-a-time level? Wouldn’t it be better to have more people at the $20/$21 monthly level than fewer at the $24 level?

I assume they have a reason, hopefully better than matching each other’s price structure. One wonders if there is some kind of supply/demand tipping-point if they had a large group of customers at the 4 at-a-time level.

So, $18/month = deal. $24/month? No deal.

  1. I have added $0.01 to the dollar amounts so we can talk in “round figures” because I’ve always hated the 99¢ marketing “trick” although it must work because they keep doing it. ↩