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The Lowdown on Blockbuster Total Access Plan Changes

Quick Facts

New Total Access Plans at a Glance

  • Prices increased on all Total Access plans, from $2 to $10/month
  • E-coupons for free movie or game rental discontinued
  • 4-at-a-time plans eliminated
  • All Plans Include:
    • Unlimited DVDs by mail (most plans)
    • $4.99 video game rentals (with DVD mailer)
  • Standard Plans:
    • Limited free in-store DVD rentals (2 - 5/month, depending on plan)
    • $1.99 additional rentals (with DVD mailer)
  • Premium Plans:
    • Unlimited in-store DVD rentals (with DVD mailers)
    • $10 - $15 more per month than standard plans

Update, February 24, 2009: Get ready for more changes to your Blockbuster.com plan! Starting in March, Blockbuster will not ship out your next movie until you return your in-store rentals, according to HackingNetflix. This means a longer wait and fewer movies for Total Access customers.

Like the last two times Blockbuster broke the bad news to its online customers, you have to read the fine print to discover the reduction in services.

Read the full e-mail Blockbuster is sending out at HackingBlockbuster.com and read the lively discussion at HackingNetflix.com.

The new policy is reported to take effect March 2, 2009. However, Blockbuster's support section already talks about the policy. See FAQ #1088 and #73.

Now back to the regular article...

In six short months, Blockbuster nearly doubled the monthly price of its top online movie rental plan from $17.99 to $34.99. The remaining plans either doubled in price or restricted the number of movie rentals.

For existing customers, Total Access price increases and plan limits came with little notice and only applied Blockbuster's least profitable customers.

Customers have responded by leaving Blockbuster by the droves. And this is exactly Blockbuster expected to happen. CEO Jim Keyes refers to it as "pruning the tree" of unprofitable customers.

Blockbuster's new management is, quite wisely, less concerned with competing aggressively with Netflix and more interested returning the company to profitability. However, their fire-the-customer attitude ensured many formerly loyal Total Access customers will never return.

What is going on at Blockbuster? Are there more price increases in the future? Do they still have a better deal than their competitors? Why are some customers getting preferential treatment?

We set out to answer these questions and more below. Get the lowdown on the Total Access price increase.

 

Contents

 

 

Blockbuster Total Access Price Increases
Total Access PlanExchange LimitNov. '06 PriceJuly '07 PriceToday's PriceIncrease
3-Out, Premium Unlimited$17.99$24.99$34.99$17
2-Out Premium Unlimited$14.99$21.99$29.99$15
1-Out Premium Unlimited$9.99$16.99$21.99$12
3-Out Standard 5N/A$17.99$19.99$2
2-Out Standard 3N/A$14.99$16.99$2
1-Out Standard 2N/A$9.99$11.99$2
1-Out Max 2/mo. 2$4.99$7.99$9.99$5

 

 

A Look at the New Plans

Track Exchanges with Receipt

The bottom of your store receipt shows how many mailers you have exchanged for free rentals or discounted games in a given month.

Total Access has two plan tiers: Standard and Premium (see Blockbuster's chart below). Both versions of the plan offer unlimited DVDs by mail (like Netflix). Both versions allow you to exchange the DVDs you receive in the mail at your local Blockbuster store for free movie rentals or $4.99 video game rentals (normally $6.99).

Standard Total Access plans have limited in-store exchange privileges (from 2 to 5 per month, depending on the plan). Once you hit the exchange limit, each DVD envelope is good for a $1.99 in-store rental.

After hitting your exchange limit on the standard plans, the DVD freebies and discounted game rentals end until next month. Your rental credits are replenished on the first day of the month (not the day your credit card is charged).

The bottom of your Blockbuster Video rental receipt shows how many in-store exchanges you have made in a month (see info box).

Premium Total Access plans allow you to exchange an unlimited number of DVD mailers for free in-store rentals and/or discounted game rentals. However, Premium plans are $10 to $15 more expensive than their standard counterpart. It is nearly impossible to save money on these plans.

 

Comparison of new Blockbuster plans.
Your Total Access Plan Choices

Prices start at $9.99 and go as high as $34.99. Premium plan prices are almost double the November 2006 prices. (Chart from Blockbuster.com)

 

 

Choosing Between Standard and Premium Plans

Unless you are a frequent renter, you will probably be happy with the standard plans. For example, on the standard 3-at-a-time plan, you would need to rent more than 25 movies per month before subscribing to the Premium Total Access plan makes financial sense.

The math works like this: Premium Total Access plans with unlimited in-store exchanges are $10 to $15 more expensive than their exchange-limited counterparts. Additional rentals on standard plans are $1.99 each (provided you bring in an envelope). The savings on the Premium plans begin when the total of your $1.99 rentals would cost more than difference between Premium and standard plans.

On the 3-at-a-time plan, 13 in-store rentals is where you begin to save money. This is the 5 free in-store rentals included in the standard plan plus 8 $1.99 rentals, covering the $15 spread between the Premium and standard plan.

As you can see, you have to work very hard to save on the Premium plans. Blockbuster no longer even shows these plans on its sign up page by default.

 

 

Is Total Access Still a Good Deal?

Blockbuster has two major competitive advantages with its Total Access plans: The most movies for your money and the spontaneity and intimacy of renting movies from the video store. If either of these are important to you, Blockbuster's Total Access plans have no equal.

However, Blockbuster doesn't deliver the online movie rental experience as well as you know who. If you are only interested in movies by mail, you are probably going to be a happier customer with Netflix.

 

Quantity is King

In terms of the number of movie rentals for the price, Blockbuster Total Access is still the best deal in online DVD rentals. You can easily rent 17 movies in a month with the standard Total Access plan at $19.99.

Here's the math: Rent 3 movies a week by mail for a total of 12 in a month. Rent another 5 from the video store during the month for a total of 17 movies.

In comparison, under Netflix you would net 12 movies by mail for $16.99 with the same 1 week DVD turnaround.

Blockbuster's Total Access plan offers the most movies for your money, though it requires some math to see the savings with today's pricing. Only months ago, you could use the simple "twice as many as Netflix" formula.

 

Quality Over Quantity

Blockbuster beats the pack in number of movies for the price. However, the average subscriber rents around six videos per month. For most people, movie renting clearly is not about quantity.

Blockbuster's has been quickly improving its online service, particularly in terms of selection. But compared to its experienced rival, Netflix, Blockbuster has a long way to go.

From inconsistent and often missing movie details to the sense of disorderly shipping of movies in your queue, Blockbuster has yet to match the Netflix online customer experience.

Sometimes the best deal is measured in terms of quality rather than quantity.

 

Shrek, Rated "R" (According to Blockbuster)

An example of the sorry shape of Blockbuster.com's movie database. There are two mistakes: The movie rating and the title- "A Shrek the Third."

 

The Video Store Advantage

Blockbuster Total Access offers something that no other company can touch: In-store rentals. Many people prefer the store experience to online. In fact, 82% of America still rents movies from the video store.

Some like to decide what movie to watch the same night, rather than days or weeks beforehand. Some appreciate browsing through DVD cases in person before renting.

Total Access customers have the best of both worlds: Online and in-store rentals on the same plan.

If you enjoy renting movies from the video store and consistently rent at least two videos per month, Blockbuster Total Access is a great deal for you.

 

 

A Brief History of the Total Access Plan

Blockbuster's online DVD rental service began in 2004. It was simply called Blockbuster Online until November 2006. This is when they added the in-store DVD envelope exchange privilege and renamed the plan "Total Access." This is where our story begins.

 

November 1, 2006: Total Access is Born

The Wild Swings of Blockbuster Online's Subscriber Count

What a difference a year can make! Blockbuster recruited legions of customers in a short time and then decided they didn't want them.

Blockbuster launched Total Access November 1st, 2006 under different management. At the time, Blockbuster had 1.5 million online customers, who were are converted to Total Access. The concept of exchanging DVD mailers for free in-store rentals was born.

For a brief period, they even let Netflix customers exchange their mailers for free rentals.

Blockbuster Online had been experimenting with "e-coupons" in the couple of years before Total Access was launched. The e-coupons gave subscribers a free in-store rental anytime (no DVD envelope required). At one point, Blockbuster was offering one e-coupon per week.

When Total Access was launched, it included one e-coupon per month. Existing customers receiving more than one monthly e-coupon before the launch continued receiving the same number of coupons.

In the beginning, Blockbuster's Total Access plans were the same price as Netflix but offered more than twice as many movies.

It was an incredibly generous deal but it wouldn't last.

 

July 26, 2007: Total Access Becomes Less Generous

Total Access proved very popular indeed. Between the November 2006 launch and the end of July, Blockbuster Online's subscriber base had more than doubled to 3.6 million from 1.5 million. During this period, Netflix lost subscribers for the first time ever.

But success came at a cost. The extremely generous Total Access plan appealed to customers who rent lots of movies. This all but ensured Blockbuster's all-you-can-eat pricing would eventually lead them to financial ruin.

On July 26, 2007, new Blockbuster CEO Jim Keyes made the first big change to Total Access. Under the new plan, customers could pay the same price with limited in-store exchange privileges or pay an extra $7 per month to continue getting unlimited in-store exchanges under the new "Premium" plan

The e-coupon was eliminated on these new plans. It was replaced with discounted video game rentals.

Existing Total Access customers were not treated equally:

  • The most profitable customers were allowed to keep the "classic" Total Access plans, complete with e-coupons and unlimited in-store exchanges.
  • Another, less profitable group were automatically moved to the standard plan with limited exchanges.
  • The remainder were told to choose one of the new plans before their next billing date. Blockbuster would terminate their account if they failed to do so.

Total Access customers were given very little notice of these plan changes. Often less than two weeks. The notification came through a single e-mail.

This short notice surprised many Total Access customers who went to exchange movies at their local store only to find they were cut off.

Within 3 months, Total Access lost a half million customers, down to 3.1 million. Blockbuster said they would no longer report their subscriber count going forward.

In November, just when the reality of the July price increases we're setting in, rumors of another price increase began circulating.

 

December 19, 2007: Price Increases All Around, Including a $10/Month Whammy

Blockbuster had been hinting at another price increase in early November 2007. But when a pricing chart appeared on a SlickDeals.Net message board, "When?" and "How much?" seemed like the only remaining questions.

On December 19, 2007, the other shoe dropped.

Blockbuster raised prices on all Total Access plans by at least $2 per month. Premium plans were hit hardest: $5/month for the 1-at-a-time plan to $10/month for the 3-at-a-time plan.

Combined with the July price increase, 3-out Premium customers saw their monthly bill nearly double in under 6 months, making complaints about cable bill price hikes seem quaint by comparison.

The now very expensive Premium plans are priced to encourage existing customers to leave the plans and to discourage from new customers signing up. Our calculations show it is nearly impossible to save money on a Premium plan over the standard plan equivalent. Blockbuster no longer shows Premium plans on their signup page by default.

Like the July price increase, some existing customers were given preferential treatment. Spokeswoman Karen Raskopf explained, "We are taking into account the profitability of individual subscribers." Light-renting customers were "grandfathered" into the old plans, the rest were forced to cough up extra money or quit.

Like the July increase, existing customers were given little notice: Typically less than two weeks and by a single e-mail announcement. One paragraph alerted customers to the price increase in what, by all other accounts, looked like a promotional e-mail.

Although Blockbuster no longer reports their online subscriber count, a stock analyst from Citigroup predicted half their customers will leave. If that's true, Blockbuster will have gone from 1.5 million subscribers in November 2006 to 3.6 million in July 2007 and back down to 1.55 million.

That's a lot of energy spent to end up in the same place.

 

 

Why Did They Do It?

Blockbuster has been losing money fast. Competing aggressively with Netflix is costly. The new management and vocal board member Carl Icahn didn't want to bet the entire company on online DVD rentals. While they're not getting out of the online rental business, the days of doubling Netflix's offer, at the expense of their profitability, are over.

CEO Jim Keyes summed up the new strategy for Total Access: "We are not in the business of buying subscribers. We are in the business of adding profitable subscribers."

Blockbuster's online program had been a source of contention within the company. Former CEO and chairman John Antioco, who led the company for a decade, saw online movie rentals as the future of the industry. Some investors and board members, led by Carl Icahn, believed management was spending too much money too fast in the online business while neglecting the core source of their income: Retail stores.

Under John Antioco, Blockbuster invested $300 million in building and promoting its online business. In just three years, Blockbuster had 3.6 million online subscribers (compared to Netflix with 6.74 million customers after eight years in business). Under Antioco's leadership, Blockbuster had become a serious threat to Netflix, which lost subscribers for the first time in its history in mid-2007.

From Icahn's standpoint, Blockbuster's move to online video rentals didn't need to be so aggressive or expensive. Very heavy spending on promoting the Total Access program was all but ensuring quarterly losses. Online customers represent a lower profit margin than retail-only customers. With just 16% of the US renting online, artificially speeding up America's migration to online movie rentals only hurts their bottom line. Focus on the online business caused Blockbuster, in Icahn's view, to miss a golden opportunity to buy out troubled rental chain Hollywood Video (which has since gone bankrupt). For a company that lost $2.87 billion since 2003, spending $300 million on a venture that could ultimately cannibalize the value of its traditional rental business was a big mistake, according to dissenting shareholders.

In the end, Carl Icahn and crew won. John Antioco agreed to leave the company. Jim Keyes (former CEO of 7-Eleven), took the helm.

Within three weeks of the Keyes era, Total Access was retooled. Followed by a second retooling less than six months later. The end result: The Total Access plan lineup has a competitive edge on Netflix but is no longer lavish in generosity.

Today, Blockbuster's new management achieved their objectives: Total Access customers are paying more and getting less. Total Access is now profitable as a result. Blockbuster, as a whole, has had two profitable quarters in a row.

With Total Access no longer hemorrhaging money, CEO Jim Keyes say the time is right to "focus on aggressive development of our digital offerings." These include: MovieLink, video rental kiosks (similar to redbox), little movie cards to stick in your phone, video on demand set top boxes and buying Circuit City.

When it comes to these new offerings, just remember the lesson from Total Access: Blockbuster + "aggressive development" = prices and terms subject to change.

 

 

Yes, They Do Want You to Cancel Your Subscription

Blockbuster told HackingNetflix.com they don't want to lose any customers. What management told its investors is a different story. The extreme price increases were meant to force unprofitable heavy renters to leave Total Access (or at least pay a lot more for the privilege).

From July to September 2007, Blockbuster lost a half million online subscribers- down to 3.1 million customers from 3.6 million. While that may sound like bad news to an outsider, executives and investors were practically celebrating.

They boast that the changes to the plan "significantly reduced the number of unprofitable Blockbuster Total Access subscribers" in their third quarter, 2007 earnings press release.

Blockbuster's message was more explicit in their third quarter conference call: "This was a conscious effort to prune the tree and in other words, we were willing to walk away from some of our subscribers, those at the far end of the usage scale who are not willing to pay a higher price for unlimited free exchanges."

 

 

Your Future as a Blockbuster Total Access Customer

The Good News

  • Blockbuster is done raising your Total Access bill

    A month before the second Total Access price increase, CEO Jim Keyes said, "What I don't want to do is raise (prices) three or four times." If we take him on his word, your monthly bill should remain steady for some time to come.

  • Downloadable movies through MovieLink

    With the recent purchase of MovieLink, Blockbuster will soon offer its customers movies on-demand through its web site. There is a free movie section if you want to test it out. This service is only useful if you have a convenient and comfortable way watch movies through your computer (either on your laptop or by connecting your computer to your TV). It's Windows-only; Mac and Linux users need not apply.

 

The Bad News

Your Blockbuster Video store may close

Blockbuster closed 290 US stores in 2006 and planned to close another 282 in 2007. If your store isn't popular, you may wake up one morning to find it's gone. With no store to visit, there's no point in being a Total Access customer. After all, you are paying at least $3 extra per month for in-store exchange privileges.

 

 

What Do You Think?

How do you feel about the changes to the Total Access plan? Do you have any questions this article didn't answer? Are you still sticking with Blockbuster after this plan change? Are you one of the lucky ones who is allowed to keep your "classic" Total Access plan?

Join the discussion on the Feedback page.

 

Originally Published:  Tuesday, August 28, 2007, 5:00 PM PT

Last Updated:  Tuesday, July 12, 2011, 9:27 PM PT

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