Netflix has always focused on innovation with everything from their award winning user interface to the longstanding Netflix Prize. Aside from technical innovation, they have also pioneered a new business model for online on-demand movie downloading by charging consumers based on the hours they watch, streaming movies without actually downloading them and letting users switch instantly from film to film as easily as changing channels. Ultimately, they will need all this innovation – because Blockbuster is getting smarter and smarter about finding ways to exploit their only competitive advantage over Netflix – their physical stores. Recently, Blockbuster has shifted their marketing strategy into directly taking on Netflix … a move I can only attribute to a smart brand session where they realized they were losing and were #2. This is a challenger strategy, and you have to give Blockbuster some kudos for realizing that they are the challengers in this market.
Bringing this realization to life are their smart TV spots using animation to compare their service to Netflix and point out how they plan to use their stores to let customers get and return movies in whatever way is most convenient for them. I found myself in a Blockbuster rental store for the first time in years last weekend due to a strange combination of events and everything in the store was also focused on getting you to subscribe to their service – offering free videos on the spot, "exclusive" promotions and even promising that by signing up, you could avoid having to drive all the way back to return the movie you were about to rent. Marketing to the lazy gene in all of us is always a smart choice.
But I have been a long time Netflix customer and consider myself a brand loyalist. So I didn’t sign up then. But it’s getting harder and harder to ignore Blockbuster’s message. Today, they are offering a "President’s Day Pardon" promotion, where you can bring in your Netflix envelope and receive a free movie from Blockbuster. Obviously, a great moment to poach Netflix customers and inform them about Blockbusters competing program. Ultimately, the thing that is keeping customers loyal for Netflix won’t be the interface or even the innovations – but the very vocal customer evangelists they have. Already there are customer experience videos on YouTube proclaiming Netflix far superior to Blockbuster, the Hacking Netflix blog dedicated to all things Netflix and glowing reviews about their new download service. When I am a Netflix customer, I feel like part of a community. For now, that’s enough to counter the convenience factor Blockbuster seems to be offering. Well, that and Netflix’s far superior collection of Bollywood films …
Note: The Netflix image above is from the Gizmodo post referenced earlier. There is a phased rollout for the movie downloading feature – and unfortunately, I haven’t yet received access on my account to test it out myself.