Tags: Blockbuster | Targets | Disgruntled | Netflix | Customers

Blockbuster Targets Disgruntled Netflix Customers

Friday, 15 Jul 2011 12:57 PM

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 its 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 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."

In response, a Netflix spokesman said its plans still offer better prices than Blockbuster.

"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?" said spokesman Steve Swasey in an email.

Unlike Netflix, Blockbuster does not offer packages to stream unlimited movies and TV shows. As part of the offer, subscribers to Blockbuster's DVD-by-mail plans can swap their movies in Blockbuster stores for new ones as many times as they like. Blockbuster's plan also includes video games, which Netflix does not offer.

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 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. Some subscribers who commented said they would switch to other services.

Blockbuster's chief marketing officer, Kevin Lewis, said that the aggressive campaign was inspired by customers who expressed their frustration against Netflix on Twitter.

"We said, if everyone is saying 'Goodbye Netflix. Hello Blockbuster' on Twitter, we should use that," Lewis said in an interview.

Dish Network shares closed 2.1 percent lower on the Nasdaq.

© 2017 Thomson/Reuters. All rights reserved.

 
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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...
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Friday, 15 Jul 2011 12:57 PM
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