Digital Home Thoughts - News & Reviews for the Digital Home

"While I’ve always liked Netflix, I’ve remained dubious as to their potential for long term success. Even when they hit their first million subscribers I thought little of it. From my perspective, with tens of millions of customers, I figured sooner or later Blockbuster would just wipe out Netflix’s market share and opportunity. Instead, Netflix is en route to 9 million subscribers, and I’m more than a little surprised. A conversation last night with a good friend of mine helped me understand why this is happening. It’s a few parts Innovator’s Dilemma, and a few parts just plain bad business. It’s a Cinderella story. Outta nowhere."

Earlier this year I posted why I left Blockbuster. The above article has a nice business analysis of why Netfilx is kicking Blockbuster's butt. While I agree with the article, Netflix success comes down to management actually understands the customer and is proactive in making sure the customer has a positive experience. While my experience with Blockbuster was riddled with periodic frustrations that piled up until they broke the camels back, Netflix has been smooth sailing. When I mail back a DVD, I get a new one two days later. Their streaming works great. When they have had problems, they've been proactive about informing the consumer and liberal about providing credits with waiting for the customer to complain. Their pricing is more than reasonable, especially if you make liberal use of Watch It Now and even though their is a surcharge for getting Blu-ray, $1 additional per month seems more than reasonable considering that Blu-ray disks cost more than DVDs. (Side note: I broke down today and bought a Blu-ray player and added Blu-ray to my Netflix account, my HD-DVD player is sitting in the corner sulking.)

"At the title states, the Blockbuster OnDemand MediaPoint 2Wire box just isn't ready for prime time. While the pricing is extremely reasonable ($99 for the hardware, including 25 movie rentals), the interface looks pleasant, and the content selection is solid... the device is in need of a software update before I can recommend it."

It looks like the Blockbuster OnDemand set-top box might not we quite ready for public consumption. Dave over at ZatzNotFunny.com rented one movie and after unresponsive hardware, manual reboots, DRM errors, video artifacts, stuttering, and loss of audio/video sync he has packed the box away in the closet. For a box that only does one thing, it doesn't seem to do it very well.

"UPS just arrived with the new Blockbuster OnDemand movie rental box, by 2Wire. If you recall, $99 gets you the box and 25 video rental credits. Once those have been consumed, content begins at $1.99 a pop. Packaging is Blockbuster branded, though there’s absolutely no mention of “Blockbuster” on the unit. (Then again, the competing Roku box is also devoid of “Netflix” branding.) The AppleTV-shaped hardware feels somewhat plasticy, but it’s more attractive and has more personality than the Roku box."

On the surface, looks pretty similar to the Roku box (which I have and am working on a review of) but focused on rentals rather than the all-you-can-eat mentality of the Roku box. It does not look like this is tied to Blockbuster's on-line rental service and if it offers a decent number of new releases, it might be attractive to those that only get a few movies a month.

"Blockbuster Inc. caught up to the competition last week by introducing a set-top box that brings rentals from the Internet to the television. Now, the Dallas-based company hopes to pass the pack by teaming with Microsoft Corp. on new mobile services that will let customers watch even more movies on more devices. "Eventually, we'll give customers instant access to any movie on any device with an Internet connection and a screen," said Keith Morrow, Blockbuster's chief information officer."

Blockbuster news continues to trickle out. Last week Blockbuster announced a new set-top box and over the weekend it was announced they would eventually support downloading to some Blu-Ray players. Today, the news broke that they are teaming with Microsoft to deliver a new set of mobile services, in part based on LiveMesh. Details are sketchy and this is more of a directional announcement than an product announcement. However, it sounds like Blockbuster is seriously considering how to better compete in this new media environment.

Now if they can just do something about the paltry size of their Blockbuster OnDemand library...

"We've rubbed our eyes four or five times now, but the factual heat remains: Blockbuster -- of all companies -- has decided to dive headfirst into the movie set-top-box arena. We wanted to believe the rumors were false, but sure enough, it has joined VUDU, Apple TV, Roku and the Xbox 360 in the highly competitive market place for your digital download dollars. For a "limited time," the outfit will offer the 2Wire-built MediaPoint player for free with the "advance rental of 25 first-run movies, TV shows, foreign or classic films from Blockbuster On-Demand (previously Movielink) for $99." After that, rentals are $1.99 apiece, and a Blockbuster subscription is not required. The unit itself measures 8- x 8- x 1-inch and includes two USB ports, an SD slot, Ethernet / WiFi and an HDMI port, and it should be available at the company's website and in select retail stores very soon."

This has been rumored for a while and it hit the news today: Blockbuster has jumped into the set-top box business. While there are several other established options (Apple TV, VUDU, Tivo/Amazon, Roku/NetFlix, etc.), internet-delivered video-on-demand is still a very young market. Given Blockbuster's history, this is a logical step. The Blockbuster OnDemand library is seriously lacking, however. They only have about 2,500 movies available and it all appears to be SD content. It will be interesting to see how this whole market plays out!

Have you made a choice in the internet-delivered VOD space? Let me know in the comments.

Dear Blockbuster,

It's not me, it's you. I really liked you, but you just seemed to stop caring. Today's phone call was the last straw, as soon as I can copy my queue to Netflix I'll be gone. Here is what happened.

I've been fairly happily using the Blockbuster service for a while now. I really liked that I could return movies to the store and get free in-store rentals in return. Plus, they automatically cleared the queue when returned to the store, shaving at least a day off of the ship time for my next movie. I returned my last three movies to the store on 7/23. I received one movie in the mail to replace it on the 7/26. By 7/30, I started to wonder where my other two movies were, so I went to check my queue. I had over 70 movies in my queue, about half of which were available. Since I've been with Blockbuster, I have quite a few movies that are Long Wait or Very Long Wait such that these have started to accumulate at the top of my queue. Read more...

"Instead, it's (once again) Netflix realizing that the future of the the rental business isn't in the brick-and-mortar and probably not even in the mail sector. It's Netflix that's adapting to the changing times by streaming movies and TV shows to its Roku box and, now, the Xbox 360. And in one fell swoop, Netflix has once again made Blockbuster irrelevant. What other recourse does Blockbuster have now other than to keep plugging away with its brick-and-mortar business and hope to stay afloat long enough to sell it off to the highest bidder? It's not only the loser in the rental business, but now that it's slow to the streaming game, how can it capitalize on the market?"

Blockbuster could of course team up with Sony, but I find that unlikely. Blockbuster may very well be snuffed out of existence in the next few years. Netflix may well own the streaming market which greatly diminishes the top end of the market. Meanwhile they can always go for the low end of the market that is years, if not decades away, from really being ready to stream. But on that end, they are going to get squeezed by kiosks like the ones going in Wal-mart that rent movies for $1 per day.

"Unfortunately the details are sparse at this time, but Reuters reports that Blockbuster is getting set to launch a stand-alone set-top movie player, akin to Apple TV, in the next month that will stream/download video content via the Internet. No word on pricing or who the manufacturing partner(s) might be. Also revealed, is that the company’s recently acquired Movielink service will be integrated into Blockbuster.com by the second quarter of this year, which will allow subscribers to watch videos on their PCs."

Oh c'mon, not another set top device. I would much prefer if Blockbuster offered a service that would integrate with one of the existing media extenders like the XBox 360 or the PS3. In fact, Dave Zatz had said just this some time ago and had gotten a favorable response. I get the sense that, and understandably so, Blockbuster is beginning to panic. As a consumer, all I hear is new things that Blockbuster is planning and that just doesn't give me the sense of stability there.