NetFlix & BLOCKBUSTER DVD Movie Rental News

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DVD Rental and Movies On-demand News

I have lived without a television pretty much since leaving high school 15 years ago and when not reading a good book or watching the lousy programming on someone else's TV, I watch DVDs on my Apple PowerBook. Living in a rural area (the Catskill Mountains of New York state), there's not such a wide selection of DVDs available for renting in local movie rental stores. So I'm constantly looking for good sources for the latest DVD releases.

Last year I used NetFlix for a few months and the selection was certainly way better than anything I could find locally, but it turns out they penalize you for returning movies too quickly and begin to slow down the sending of your next selections in the movie rental queue. Last weekend I switched to Blockbuster Online® which is not only cheaper, but also provides subscribers with two free in-store movie or game rentals each month. I'm waiting now to see if I notice any of the same beahvior from them as NetFlix was pulling (namely, slowing down how quickly they sent out new selections).

For those who haven't tried a DVD rental service like NetFlix and BlockBuster Online®, here's how it works. You select movies from just about everything that's ever been released on DVD and these selections are placed in your movie queue. You can rearrange the queue items so that movies are sent to you in the order you choose, and both services allow you to have have three DVDs checked out at one time. As soon as you send back a DVD your next selection is sent out to your mailbox. All postage is paid, including return postage (they provide a special postage-paid envelope for you to drop the DVD disc into), there are no "late fees" -- so keep the DVDs as long as you desire, but you won't receive additional DVDs as long as you have three checked out. You can read about the various features and charges on my NetFlix vs BlockBuster comparison page.

There is one complaint which I have about both NetFlix and BlockBuster Online® DVD rental services: so many DVD releases these days include bonus disks, and there's even a few movies (such as Tolstoy's War and Peace) which come on multiple disks, but neither service treats multiple disk sets as a single rental, so if you want the bonus disk, or all disks in a multi-disk movie, you have to get them in your queue and hope that they go out together. This is annoying since the extras/bonuses on Criterion Collection DVDs are usually pretty good.

NetFlix shows 2005 Profit NEW YORK - Shares of Netflix Inc. rose Tuesday after the online DVD rental company said it expected a 2005 profit instead of a loss as it adds subscribers and contains costs.

Netflix stock rose $2.54, or 15 percent, to $19.50 in morning trading on the Nasdaq Stock Market. The shares traded as high as $20.80, above the 52-week high of $20.70 set July 29.

Los Gatos, Calif.-based Netflix posted second-quarter earnings late Monday of $5.7 million, or 9 cents a share, up from $2.9 million, or 4 cents a share, in the year-ago quarter. Netflix said in April that it expected a 2005 loss of $2.2 million to $7.2 million.

Excluding stock-based compensation, the company earned 14 cents a share in the second quarter.

The company's new $9.99 a month program of unlimited monthly rentals of one DVD at a time and continuing service excellence led to the rate of lost customers dipping to 4.7 percent in the quarter from 5 percent in the first quarter, said Piper Jaffray analyst Safa Rashtchy.

That allowed the company to spend less on marketing, which cut the costs of acquiring new subscribers to $37.25 each from the $37.89 of the first quarter, he said in a research note.

The number of subscribers increased by 53 percent in the quarter to 3.2 million from the 2.1 million a year ago and Netflix said it expects to have more than 4 million subscribers by the end of the year.

Rashtchy upgraded Netflix to "outperform" from "market perform" and raised his price target to $24 a share from $11.

The company increased its revenue forecast to between $678.1 million and $688.1 million. The previous forecast was $660 million to $685 million.

Lehman Brothers Inc. analyst Anthony DiClemente noted that the earnings outlook doesn't reflect the effect of a Blockbuster Inc. price change.

DiClemente said in a research report he continued to think that Blockbuster will increase its "aggressive" $14.99 price for its three-at-a-time monthly online rental service in the next quarter or two. That move "would ease churn fears and allay the chance (Netflix) would be unable to maintain subscriber domination of the category."

Netflix charges $17.99 a month for its unlimited three-movies-at-a time service.[SOURCE:]

McDonald's to Offer DVD Rentals McDonald's is expanding tests for a national DVD rental service in its restaurants, promising to turn the fast-food chain into a do-it-yourself Netflix for road warriors.

The company has been testing a drop-off rental service in Denver through its Redbox subsidiary, letting customers rent discs for $1 a day. Today, Minneapolis-St. Paul, Minnesota, becomes the fifth market where consumers can rent McDVDs, and the company plans to install its Redbox kiosks at 145 sites. Houston, Texas, will follow with 181 machines by July 1.

The chain tested machines that stock up to 350 units in its 105 Denver, Colorado, stores. But going forward, new machines, commissioned from Solectron, are super-sized to hold 550 discs each. For now, that prevents inter-city returns, because the old and new machines run on different back-end systems. But after the new market rollouts, McDonald's will replace the older machines and bring everything onto one network.

Rentals are primarily the top 40 new releases, cost $1 a night for each (paid by credit card only) and are due by 10 p.m. the following day. If a customer keeps the disc, they are charged $1 a day until the disc is returned or 25 days have passed, when the renter becomes the owner. [SOURCE: Wired! News]

NetFlix Takes over Walmart DVD Rental Service LOS ANGELES (Reuters) - Netflix Inc., the online DVD rental company, and Wal-Mart Stores Inc. said Thursday they have struck a deal to co-promote DVD sales and rentals, with Wal-Mart shutting down its online rental service to concentrate on DVD sales.

Under the agreement, Netflix will promote Wal-Mart (Research) DVD sales to its 3 million subscribers, and Wal-Mart will offer its online customers the opportunity to sign up with Netflix at their current subscription price for a year.

Wal-Mart is the world's largest DVD retailer, and Netflix is the world's largest online DVD rental service.

Wal-Mart Online, in an advertisement that appeared early Thursday on its Web site, said the company will not accept new members and offered a link to Netflix, where customers can sign up for the DVD rental service at their existing Wal-Mart rates for one year. to enter DVD Rental Business News of Amazon's intentions were disclosed Thursday afternoon by Netflix founder and CEO Reed Hastings during the company's earnings call. Netflix said it would cut prices to ensure future growth in the face of competition from Blockbuster, Wal-Mart Stores and soon Amazon.

Hastings' comments, coupled with the company's price cuts, caused Netflix's stock to nosedive in after-hours trading. The stock closed at $17.43 Thursday afternoon but plummeted to $10.99 after the market closed.

An Amazon spokeswoman stopped short of confirming its plans to offer DVD rentals and instead presented a reason to enter the business. [SOURCE:]

BlockBuster Ordered to refund Late Fees (SACRAMENTO) - Attorney General Bill Lockyer today announced that he and the Attorneys General of 46 other states and Washington D.C. have reached agreement with Blockbuster Inc. to settle allegations Blockbuster misled consumers in advertising its "End of Late Fees" or "No Late Fees" program.

"Blockbuster's No Late Fees campaign may have had a catchy slogan and clever ads, but it did not tell the truth," said Lockyer. "This agreement ensures consumers no longer will be misled, and that those who were deceived can get their money back."

The Attorneys General alleged the advertising campaign misled consumers because it failed to clearly and conspicuously disclose that if customers rent a video or game from Blockbuster and keep the item more than seven days after its due date, they automatically are charged the retail price of the product, unless they return it within 30 days. Even if such customers return the video within 30 days, they still are assessed a "restocking" fee of $1.25, or higher at some franchise stores.

Under the AVC, Blockbuster also will provide a full refund or credit to any customer of a corporate store, or participating franchise store, equal to the selling price of any rental item converted to a sale under the program. The restitution will be on a one-time per customer basis but will cover all items rented which were converted to a sale before the customer first learned such a conversion would occur. Customers who returned items within 30 days, but paid a "restocking" fee, will be able to obtain a refund of that fee. A request for restitution must be made in writing and allege a failure to understand the "No Late Fee" program.

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Top DVD, Movie and Game Rental News
BlockBuster Online™ Expands Distribution Centers Buys DVD-on-Demand Service has confirmed the purchase of CustomFlix, a Santa Cruz, Calif.-based company that produces and sells independently produced DVDs. Last year Netflix founder and CEO Reed Hastings confirmed in a conference call that he's heard rumors is looking to get into the DVD movie rental business. CNET

NetFlix and TiVO Partner to Offer Movies on Demand Netflix and TiVo announced a partnership to develop a movies-on-demand service as well as efforts to secure content from Hollywood studios.

Netflix spokeswoman Shernaz Daver did not divulge many details of the partnership, but said that it's a first step in a multiyear process toward delivering movies digitally over the Internet. A Net video-on-demand service will give Netflix subscribers an alternate way to rent DVDs, she said. Currently, the company only delivers DVDs via the U.S. Postal Service. For TiVo, a films-on-demand service will help populate its digital video recording service with new content, she said.

"If you look at the Internet, it's really just starting out to be a delivery mechanism for content. Long term, that's the way we think movies will get delivered," said Daver, who just joined Netflix this week as head of corporate communications. "We have a strategy to deliver movies across the Internet, and TiVo is one step in that direction."

The two companies have close ties--TiVo Chief Executive Mike Ramsay has been on the board of directors at Netflix for some time. But Ramsay on Thursday resigned from his board position, effective immediately, to avoid conflicts of interest.

Rumors have swirled for months that the two companies would strike a deal. Building new services is crucial for both TiVo and Netflix as they confront growing competition from deep-pocketed rivals. Netflix's business is being threatened by larger rivals, including Blockbuster and Wal-Mart Stores. TiVo, which provides both DVR (digital video recorder) hardware and services, faces similar challenges from cable companies and a potential loosening of its partnership with DirecTVCNET