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.

Blockbuster Offers Four Weekly Store Rental Coupons

During Super Bowl XL game day programming, Blockbuster will advertise a new option for store rental coupons. Instead of two monthly coupons for movies and games, new and existing subscribers will have the option of receiving four weekly coupons for movies only. (Games are excluded because they can be significantly less profitable for Blockbuster.)

Subscribers who were getting twenty-four coupons per year will now be able to receive fifty-two, which more than doubles the annual total of coupons awarded previously. The obvious advantage to the weekly coupons is many more store rental opportunities. This disadvantage is that subscribers will have to make four roundtrips to Blockbuster stores to use all of the coupons. (Subscribers using the two monthly coupons need to go to a Blockbuster store only once per month.)

Subscribers on the one-out plan will not be able to use their weekly coupons for new releases; however, subscribers on the other plans will be able to use their weekly coupons for any movie.

It is important to note that each weekly coupon expires at week’s end. Also note that if you currently use your in-store rental coupons to rent games, you do not want to make any changes to your Blockbuster plan. If you switch to the weekly coupon plan, you will permanently lose the option of using your coupons for games.

Blockbuster Adds Playboy Titles (Shhh.)

Question: If you’re Blockbuster and have a squeaky clean image, how do you offer Playboy titles on your Web site?

Answer: Very quietly.

Apparently, Blockbuster Online quietly added a few Playboy titles to their lineup sometime prior to the end of 2005. Currently, only R versions of these Playboy titles are available for online rental; however, Unrated editions are available for online purchase.

You can find these titles by searching for Playboy on Blockbuster’s Web site.

This is probably a marketing test. If the Playboy titles rent well, Blockbuster will certainly consider adding more. If there is a public outcry over Playboy movies being available at Blockbuster Online, Blockbuster will probably retreat and blame the moral lapse on some unlucky underling.

What do you think? Should Blockbuster Online offer Playboy titles?

Grandfathered $14.99 Customers to Pay More

If you are one of the early Blockbuster Online subscribers who was grandfathered in under the $14.99 price guarantee during Blockbuster’s August 2005 price increase, the party is almost over. Your monthly subscription fee will most likely be increasing soon.

The $14.99 price guarantee ends on January 31, 2006. Do not be surprised to see your monthly fee go up to the current standard price of $17.99.

Blockbuster Movie Pass Cancellation

If you currently have a Blockbuster Movie Pass and wish to cancel, you must cancel through the store where you purchased the pass.

You will not receive any refunds for months already paid. You must return all videos by the end the membership period or they will become subject to additional rental fees.

Below are the official details for Movie Pass cancellation from Blockbuster.

Cancellation by You:
The initial monthly Pass Membership fee is valid for an initial Pass Membership period starting on the date of purchase and continuing through the same day of the following month. For example, if on June 18 you purchased your Pass Membership, your initial Pass Membership fee entitles you to Pass Membership benefits until July 18 and your Payment Card will be charged on July 18 for the period of July 19 through August 18. You can cancel your Pass Membership at any time at the participating store where you bought your Pass Membership and you will not be charged for any additional months. There are no refunds for any months (or portions thereof) already billed or paid for. For example, if your purchase anniversary date is the 5th of each month and you cancel your Pass Membership on Oct. 20, then you will not be charged on Nov. 5 (for the Nov. 6 – Dec. 5 period) and your Pass Membership Term will expire on Nov. 5. However, if you canceled on Oct. 2, then your Pass Membership Term would expire Oct. 5. Remember, you must return any Pass Rentals rented under your Pass Membership by the end of your Pass Membership Term (or they will be subject to the Rental Terms and applicable Fees as provided above). You agree that the Pass Membership does not involve an extension of credit or a retail installment sale since Blockbuster does not impose a finance charge and you may cancel your Pass Membership at any time.