Audio Video News

What a difference a single dollar makes in the online DVD rental business. Blockbuster decided to take aggressive action to gain traction in the online DVD rental business, which "projections" show as increasing 43% during the 2007 according to Blockbuster's Shane Evangelist (how's that for a cool name?!). So, it is now offering a subscription plan called Blockbuster by Mail that's a whole $1 cheaper than its existing Blockbuster Total Access plans. The Blockbuster by Mail plan will be online only as opposed to the Total Access plans which is comprised of both online and in-store rentals.

Then, all hell broke loose as they say. Citigroup "analyst" Tiny Wible (I swear, I'm not making these names up) downgraded Netflix' stock to a "sell" with lowered price targets. Sure enough, Netflix stock dropped $1.85 that day, which was described in different corners of the press as both a "tumble" and a "freefall." Another analyst was quoted in a news story as saying Netflix has two choices: cut prices at the expense of profit margin, or do nothing and watch subscriber growth wane.

Wow. All that over $1. But one dollar over millions of subscribers per month adds up. Of course none of the analysis or quotes focused at all on whether Blockbuster offers service and a customer experience that's comparable to Netflix, which I've been extremely satisfied with over the many years I've been a subscriber. My account history at Netflix says I've been hooked up since 1999, and they done me right all that time, so I'm not going anywhere to save a lousy buck. But as far as Wall Street is concerned widgets is widgets, and only price matters.

As of March, Blockbuster was clocking in with 2.8 million online subscribers and predicting a year end target of more than 4 million. As of March Netflix is at 6.8 million and expects to have 7.3 to 7.8 million subscribers. Time will tell what you all think about this.