Blockbuster Raises Rates

Blockbuster is making changes to its “all you can eat” movie plans that compete directly with NetFlix. One of the key advantages to the Blockbuster program is that instead of mailing back the DVDs when you’re finished watching them, you can drop them off at the local Blockbuster store instead. And when you drop it off, you get to borrow a DVD from the store as well; this is in addition to the replacement you’ll receive by mail. Effectively, you receive two movies for the one.

As of yesterday, the rates for these plans increased; you can choose between having one, two, or three DVDs at a time. The company is also offering two new variations. One maintains the old monthly pricing, but limits the number of “extra” DVDs you can get from your local store. If you have the three-DVD subscription, you’re limited to five free movies a month from the store. The two-DVD plan is limited to three in-store exchanges, and one-DVD to just two. You can also save a buck a month by eliminating the in-store exchanges entirely.

Blockbuster deserves kudos for grandfathering existing accounts; rates won’t increase for exisiting subscriptions, at least for now.

This is all fall-out from the fierce competition with NetFlix. Blockbuster posted a $38 million loss for the second quarter of 2007. NetFlix has more subscribers, but apparently has been losing them to Blockbuster. Netflix cut their subscription prices by $1 per month this week, which match the new Blockbuster rate for subscriptions without the in-store exchange feature. Consumers clearly are the ones to benefit from this competition.