Blockbuster Throttling Potential Addressed by Motley Fool

Never underestimate the seemingly boundless stupidity of Blockbuster. At the same time Netflix is getting pummeled with an onslaught of stories in the mainstream press about throttling, word surfaces at Motley Fool that Blockbuster has opened the door for their own throttling measures.

Blockbuster’s current Terms of Service allows them to throttle heavy users much like Netflix does. If Blockbuster gets caught throttling, they will suffer the same wrath that Netflix is experiencing now but only worse. The backlash will be worse for Blockbuster, because hatred for Netflix goes back only about two years. People have been hating Blockbuster for over a decade. People love to hate Blockbuster, and this will give them another perfectly justifiable excuse to bash the company.

It is simply astounding that, after Blockbuster spent all of 2005 trying to rebuild their corporate image, they would even think about taking a chance on something that could do irreparable harm to their reputation. If Blockbuster Online gets caught throttling, and the general public catches wind of it, there is going to be major trouble among its customer base.

It is true that throttling is a profitable practice, because it limits losses and focuses customer service on the most profitable subscribers, but the issue here is corporate good faith. People do not like to be tricked, especially when money is involved. Yes, Blockbuster can get rid of their most costly subscribers by throttling them, but those subscribers are going to tell everyone, and the word will spread. Even the light and moderate users are going to feel less than enthusiastic about paying for an unlimited rental plan that is filled with limitations.

Here is the section of Blockbuster’s Terms of Service that allows them to throttle users.

Selection and Allocation of Product.
BLOCKBUSTER Online will automatically ship titles to you, up to your maximum number of outstanding BLOCKBUSTER Online Rentals, from and in the order that you have listed in your rental queue, subject to availability. However, BLOCKBUSTER Online reserves the right to determine product allocation among members in its sole discretion. In determining product allocation, we use various factors including, but not limited to, (i) the historical rental volume for each subscriber, (ii) historical number of outstanding rentals relative to a maximum number of outstanding BLOCKBUSTER Online Rentals allowed under a subscriber's plan, and (iii) the average rental queue position of BLOCKBUSTER Online Rentals that have shipped to a subscriber in the past.

At this point, it is unclear if and how Blockbuster intends to apply throttling measures, but the company needs to be very clear about it before they earn the same reputation Netflix has now. Blockbuster’s Terms of Service suggests that Blockbuster Online might reserve more popular titles for its more profitable users. What is unclear is whether Blockbuster intends to actually limit the number of DVDs a subscriber can receive through the use of common Netflix throttling tactics like remote shipping locations and processing delays.

Rest assured that Blockbuster Underground is keeping a very close eye on throttling at Blockbuster. If Blockbuster Online begins throttling, the events will be chronicled here for the world to see.