Friday, November 02, 2007

It's Official: Netflix (NFLX) Destroys BlockBuster (BBI)


For a few minutes, it seemed BlockBuster's Total Access plan might actually post a problem for Netflix: After all, the in-store pick-up and drop-off just seemed so convenient.  Well, the results are in, and the answer is "no."

As Peter Kafka reported yesterday, BlockBuster's Total Access subscription business got crushed in Q3, with subs declining by 500,000.  Netflix's subscriber base, meanwhile, resumed growth, climbing 286,000.  Analysts are now justifiably fretting about the growth of subscription business overall (it shrank for the first time), and Netflix's next challenge is to figure out how to thrive in a digital-delivery world. 

But in this latest example of how hard it is to transform a physical-world business model to compete with a focused online competitor, the word "BlockBuster" need never again come up on a Netflix conference call.  That fight is over.  (The final insult?  Netflix's market cap is 2X Blockbuster's)