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January, 2005

Blockbuster Takes Aim at The Long Tail

We've all seen the obnoxious Blockbuster ads celebrating the end of late fees by now. Obviously this is all part of an elaborate plan by Blockbuster to contend with Netflix, who has clearly taken away enough business to make Blockbuster rethink its strategies. (They even have added a suspiciously Netflixian DVD-by-mail service.)

Anyhow, my point in all this is that essentially what Blockbuster is trying to do is combat the long tail. How does a video store with physical space constraints fight against a digital service like Netflix that doesn't have to worry about the costs associated with owning property across the nation? I expect that what Blockbuster is going to find out is that this "no late fees" thing is going to annoy people more than anything else.

In the last year or so Blockbuster has started an in-store game service called "Game Pass." It allows customers to pay $19.99 a month and rent as many games a month as they'd like (either one or two at a time), with no due dates. However, a friend of mine who is a fairly serious gamer, has told me how much he hates the service. As a non-member it seems that because people can keep games as long as they'd like he can never get anything he wants. So what has he done? He's given up trying to rent from Blockbuster.

I imagine we may see something very similar happen with this new Blockbuster plan. What happens if everyone just keeps everything for the seven days (after that you have to pay for the movie)? Blockbuster will have very little in stock and I imagine people will get quite aggravated with the lack of stock. Blockbuster actually put forward a (half-hearted) answer to this question in their no late fee FAQ:

11. Aren't you worried that you won't have enough movies and games if everyone keeps their rentals longer?

A: We will be carefully monitoring the movie and game selection to make sure we maintain our current levels of product availability for you. However, it's in everyone's best interest to return their rentals by the due date, even with the end of late fees, to ensure that we have the movies and games you want to rent, available when you want to rent them.

Blockbuster is putting their trust in people acting in their "best interests," when they're in fact referring to everyone else's best interests. Honestly, it's in my best interests to get the maximum value out of my rental, thereby holding it for the maximum amount of time, is it not?

The reason Netflix works is because they've got such an exhaustive stock that they don't have to worry about human nature. Customers can hold things as long as they want, but that means they can't have another movie in its place. Basically everyone has three movies and they can do whatever they want with them, decide what your "best interests" are and follow them.

If Blockbuster really thinks that people won't take advantage of this system they've got another thing coming. Most people will take all seven days if you give that to them. I know I will (not that I rent movies from Blockbuster, but you get my point).

In the end, I wouldn't be surprised at all to see Blockbuster either sink or pull back a great many of their stores and focus on their mail service in the coming years. While I don't doubt there will always be some place video stores to give you what you want when you want it, I don't imagine that a behemoth like Blockbuster will be able to survive. Is it possible that the long tail will help to bring back the Mom-and-Pop shops that have been destroyed by the franchising of America? Because they don't have to worry about the same overhead as these conglomerates they may find they are better suited to survive the long tail explosion and provide the immediate satisfaction that people will always desire. I know when I'm given the choice I always go to the local store instead of Blockbuster.

At the very least, it's a fun idea. Right?

January 10, 2005
Noah Brier | Thanks for reading. | Don't fake the funk on a nasty dunk.