Blockbuster Online Raises Prices by $3/month

Will wonders never cease? I have personally complained of poor service and outlined performance problems with Blockbuster's online rental system since inception. With almost a "slap in the face", Blockbuster has unexpectedly announced that it will raise its prices by $3/month for their popular unlimited 3-out-at-a-time rental plan. Apparently to some corporate exec it makes logical sense to, in answer to poor customer service and a system that never truly made it out of beta, RAISE the rates on your customers in an effort to show them that you care.

The change was prefaced by a series of emails which promised upcoming "exciting" new changes to the Blockbuster online rental system. I see now that it must have been very exciting for the accounting department. If my economics are correct (and I have anything to do about it), this will be a short-lived decision as customers will jump over in droves to Netflix who has, according to our reader feedback, greater reliability, customer service and selection/availability of movies.

Where Blockbuster's head is at I have no idea. Greater efficiency and working out the kinks of the system shoudl more than have made up for any initial hardships incurred by the initially aggressive pricing structure. $17.99/month puts Blockbuster at exactly the same pricing structure as Netflix and, given their incredibly underwhelming performance, eliminates most of the advantage they may have had over their competitor.

Unless you have a Blockbuster store within walking distance to your home and really want to make use of the in-store coupons, we recommend switching to Netflix for more reliable service and a better selection (and availability) of movies.

Here is a copy of the actual email notification sent today to all Blockbuster Online customers:

Dear Customer,

Now that you've been with us for over a year, you've seen a lot of changes. Thanks to your support, in only 18 short months, our movie library has doubled in size to over 53,000 titles, with new titles being added every day. Our number of distribution centers has grown from 10 to 30 (with 5 more on the way!) and we're now shipping DVDs from over 1,000 retail stores, all so that we can get you the movies you want to see sooner.

As a charter member of BLOCKBUSTER Online®, your promotional rate of $14.99* per month was guaranteed through January 31, 2006, and as a courtesy, we've extended your special introductory rate an additional two months. Effective April 15th, 2006, your special introductory rate of $14.99* will no longer be available and the price of our three-movies-out plan will increase from $14.99* to $17.99*.

As an added benefit, we know your current $14.99* plan includes our signature free in-store coupons, redeemable for movies or games . While free game rentals are no longer available for new customers, we're pleased to continue to offer you both movie or game coupon redemption with the new $17.99* price.

It's All About Value

• The free in-store rental coupons alone give you a value of between $8** (two movie rentals at $4.19 each) and $14** (two game rentals at $6.99 each).
• Unlimited DVD rentals with up to three movies out at a time for a value of between $12 and $24, depending on how quickly you return your DVDs, based on your rental history.
• All this, a value between $20** and $38** each month ... for only $17.99* No one else can offer you so much for such a great price.

To Change Your Membership Plan

We'd like to make it as easy as possible for you to continue enjoying all of the benefits of your BLOCKBUSTER Online service. If our three-movies-out unlimited plan still meets your needs, simply do nothing. We will automatically switch you over to the $17.99* plan effective April 15th, 2006. No action is required on your behalf. However, we do have other plan options that allow you to stay at $14.99* (unlimited monthly rentals two at a time) as well as lower price points. Please click here (you may be required to sign in) if you would like to see other plan options.

Should you have questions or concerns, once you've signed in at blockbuster.com, please click on the contact us link from the home page.

With thanks for your continued membership,

Your Friends at BLOCKBUSTER Online

* Plus applicable taxes.

** The value of the free rentals and the estimated value of the subscription are based on the average price for BLOCKBUSTER corporate stores. Actual value may vary.