Blockbuster targets disgruntled Netflix customers

NEW YORK Thu Jul 14, 2011 4:16pm EDT

The Blockbuster movie rental store is open for business in the Denver suburb of Broomfield, Colorado April 6, 2011. REUTERS/Rick Wilking

The Blockbuster movie rental store is open for business in the Denver suburb of Broomfield, Colorado April 6, 2011.

Credit: Reuters/Rick Wilking

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NEW YORK (Reuters) - Blockbuster is seeking to persuade incensed Netflix Inc customers to switch their allegiances, after the fast-growing online video service provoked a storm of outrage this week by raising prices as much as 60 percent

Blockbuster, a once mighty video vendor that filed for bankruptcy protection in 2010 and is now owned by Dish Network Corp, said that a customer who switches to one of its "total access" plans to receive DVDs by mail will receive a 30-day free trial.

Shares of Netflix, which had headed downward since the start of trading, extended losses after the news and closed down 4.05 percent at $286.62 on the Nasdaq.

In a statement, Blockbuster called Netflix's price increase "shocking" and said it would "rescue upset Netflix customers." It also launched a new website around the promotion with a banner saying "Netflix customers, say hello to Blockbuster."

In response, Netflix spokesman said its plans still offer better prices that Blockbuster's service.

"I understand Blockbuster's offer is for $9.99 for 1 DVD at a time. The same offer from Netflix is $7.99 a month. Why would someone change?"

Wedbush Securities analyst Michael Pachter said he doubts that a significant number of Netflix customers will defect to Blockbuster but that the news may have sent Netflix shares lower on Thursday.

"Today's price action shows how Netflix is priced for perfection. Any chink in their armor makes the stock move," he said.

Droves of subscribers complained on Netflix's official blog this week with many threatening to cancel subscriptions after the video service raised prices by up to 60 percent for users of both its streaming and DVD-mail service.

Dish shares fell 2.1 percent on the Nasdaq.

(Reporting by Liana B. Baker; Editing by Bernard Orr and Steve Orlofsky)

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Comments (2)
laurastammer wrote:
Good move Blockbuster! I canceled my Netflix service. For now, I still have TVDevo website’s service for streaming Movies + TV, for much cheaper than what Netflix offers.

Jul 14, 2011 7:37pm EDT  --  Report as abuse
electric38 wrote:
This is good news. There should be at least 20 companies competing for streaming TV via the internet. Where are they?

The fact that the local cable company and direct TV (didn’t the public subsidize the satellites that beam the signals?) are allowed to charge you for channels that you don’t even view should be a crime.

Now they are trying to outlaw antennae TV reception. What a bunch of crooks. They are worse than a gun toting street gangster. They rob you with monopolized legal language (via lobbyists and politicians), rather than a spirit of competitiveness.

They make the FCC look like a bad joke.

Jul 15, 2011 1:59am EDT  --  Report as abuse
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