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The free hand strikes in the online DVD rental market

In a wonderful display of competition, Blockbuster said today that it is giving Netflix subscribers free rentals from Dec. 5 through Dec. 21 in exchange for the tear-off address flaps of their Netflix rental envelopes.

Netflix subscribers who wish to participate in the program can tear off the address flaps they normally discard when mailing back their DVDs and turn them in at any participating Blockbuster store to receive a free in-store movie rental. They can continue to bring in their envelope flaps and exchange them for free in-store rentals for the duration of the promotion. Netflix customers do not need to subscribe to Blockbuster's online program to participate, but a Blockbuster store membership is required. Also, the name on the Netflix tear-off flaps must match the name on the holder's Blockbuster membership account.

"This holiday season, Blockbuster Total Access is giving Netflix customers the gift of immediate movie gratification," said John Antioco, Blockbuster Chairman and CEO. "We want these movie fans to experience getting the movies they want without the wait so they never have to be without a movie, just like Blockbuster Total Access subscribers."

When asked to comment on Blockbuster’s latest move, Netflix seemed unfazed. "I think most folks know that if you get something free you're getting what you pay for," Netflix spokesman Steve Swasey said to Reuters. "The very reason for online DVD rental is that you don't have to go to the store. It's the convenience, selection and value."

Wedbush Morgan analyst Michael Pachter said: "This isn't about subscribers. Subscribers don't matter … What matters is that Blockbuster is not likely to ever lose another customer to Netflix (as a result of Total Access). Ultimately you look at value for your monthly fee."

Blockbuster Total Access is a movie rental program that gives online customers the option of returning their DVDs through the mail or exchanging them at more than 5,000 participating Blockbuster stores for free in-store movie rentals. When subscribers return their online rentals to a participating store, the store check-in process automatically initiates the process of shipping of the next available movie(s) in the subscriber's rental queue, whether or not they take advantage of the free in-store rental. Existing subscribers to Blockbuster's online rental service were automatically upgraded to Blockbuster Total Access at no extra charge when the program was launched Nov. 1, 2006.





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