When I bought my first DVD player in 1998, I got a free offer for Netflix with the player.  At that time Netflix had not yet moved to a subscription model.  It worked a lot like any other video store (you picked individual titles and were charged for each one), except that all business was conducted online.  The utility of Netflix at the time was that most video stores had a very limited DVD selection (if they had any at all).

When they went to a subscription model I balked, since I didn’t see myself paying $23.95 per month given that I typically rented only three or four movies per month.  I also never had trouble with late fees, since I’m pretty anal about returning movies on time (I’ve only ever been late once, when I had to stay late at work unexpectedly), and since I wasn’t renting from Blockbuster.  While living in Denton I used the local Payless Video across the street from UNT, which had decent prices, a good return policy (movies due by store closing, not noon like Blockbuster), and generous rental periods (e.x. rentals on Saturday weren’t due until Monday, but you were only charged for one night). 

It was only after moving to Keller and experiencing Blockbuster’s weird return policy that I realized why so much of Netflix’s marketing was devoted to the issue of late fees.  Since Blockbuster required movies to be returned by noon, it effectively took away the last day or your rental period (i.e. if you get a three day rental you had better think of it as a 2.5 day rental or you’ll get hit with a late fee when you forget to return it on the morning of the third day).  And to top it all off, their new release rental fees were higher than Payless.  At those rates, renting only four movies per month (one per weekend), after taxes, now costs about $17.25. 

So, when Netflix reduced their subscription price to $17.99/month it finally seemed worth it.  I’ve been with them for about a month now and I’m fairly pleased with it.  They have a distribution center in Coppell, so it doesn’t take long for the movies to make it to and from my mailbox. 

But one of the interesting things about the service is that it has actually encouraged me to take more chances on movies I otherwise would have passed up.  In essence, the cost to me of renting additional movies is now zero, since I’m paying the same fee regardless of whether I watch 20 movies or none in a month.  If I have to pay $4.00 plus tax for each one, plus make sure to shlepp over to the Blockbuster to return it afterwards, I tend to be more careful about what I rent.  With Netflix if I decide I don’t like it, I can just stop it, put it in the return envelope and be done with it.

Right now I’ve got about 50 movies in my queue, so I guess I’ll have movies to watch on weekends for the forseeable future.

I found it slightly ironic that Blockbuster announced the end of its late fees about two weeks after I joined Netflix.  In a way I’m not surprised that this would happen, since everyone has been pounding them over this in advertising (not only Netflix, but the cable companies with their On Demand and DVR offerings).  On the other hand, it’s a little surprising that they’d abandon what was probably a pretty lucrative revenue stream.  I suppose in the end, though, the launch of their own subscription service signalled the end of the late fee model. 

Interestingly enough, I just saw that Blockbuster is offering their subscription service at $14.99/month (through 1/31/2006).  It’s normally $17.49/month.  What’s interesting about it is that while my cost analysis of the cost of Blockbuster per-rental pricing versus Netflix induced me to go to Netflix, the savings in cost from Netflix to the current Blockbuster offer isn’t enough to make me switch to Blockbuster.  For some reason (perhaps their late fee policies), I was just never comfortable in their stores.  I just don’t have enough good will towards their brand to go back to them, even to save $3.00 per month. 

This isn’t to say that I’m going to be burning my Blockbuster card in the street.  I’ll keep it for those times when I have friends over and I haven’t had a chance to plan to get a movie from Netflix.  But I don’t expect that to happen very often.