whither, blockbuster

As I've discussed previously, I'm a fan of Netflix in part due to their ability to stick it to Blockbuster. Years of usurious late fees and tacit censorship ensured that I will never support their business, even if they evolve a new business model around renting free self-help videos to under-served 3rd world nations.

Apparently I'm not alone in my Blockbuster dislike. Herr rental chain is going to miss their subscription target of 2 million online users for Q1 2006. For comparison, Netflix tallied 3 million customers in Q1 2005. BBI stock has been on a continual skid in the face of an industry-wide 12% decline in store-based revenue, and this news is unlikely to turn things around. Awwww ...

Over a year ago, Motley Fool suggested that Netflix would hang around due to its advantage of engaging customers and satisfying their need to rent a broad variety of titles in addition to the latest releases. They were right; the NFLX stock has risen steadily over the past six months. And Netflix has recently boosted that capability by adding the "Friends" feature, by which you compare queues, ratings, and recommendations with other select Netflix users. I recently linked up with TJ, and I'm hooked. It adds a whole new dimension to see where you and friends agree or disagree about movies, providing a much-needed "community" angle to online rentals.

DVD rentals will eventually loose share to streaming video. But, like Amazon, Netflix has tapped into the need for additional context around transactions. This infrastructure and information will go a long way towards protecting their existing business, and allow them substantial leverage should they eventually partner with a content provider.

Are you paying attention, Blockbuster? What Netflix does well is called "branding" and "customer relationship management." In case BBI execs are wondering, that's different than "short-term revenue maximization."