Earlier this week, I looked at the throttling going on at Netflix
"If you're blazing through 20 flicks a month on Netflix, you'll do it a favor by going to Blockbuster
Because of postage costs, revenue-sharing deals, and the costs to acquire DVDs, Netflix is more than likely losing money on you if your monthly disc-viewing habits go into the double digits.
Well, it turns out that Blockbuster doesn't want to keep the busy beavers, either. It is now proclaiming its throttling ways as well on its terms and conditions page. Blockbuster is revealing that it takes the rental volume of its subscribers into account during the allocation process.
I got a bit of email after Monday's story from users who felt cheated by the throttling at Netflix. While I can't say I blame them, given the nature of the "unlimited rentals" pitched in the company's marketing strategy, uncapped rentals were a time bomb waiting to go off.
Subscribers who aren't going through more than a couple of discs a month -- the high-margin accounts -- may not see the value proposition to stick around. The hyperactive users see more value in the uncapped approach and stay.
The only shame here is that Netflix -- and now Blockbuster -- didn't see this coming sooner. They may eventually take the easy way out and limit monthly rentals, the way Amazon.com
Online ads and beefed-up product-placement deals would have at least covered some of the overhead of the hyperactive subscribers. It wouldn't have been enough, but it would have been a good place to start.
Longtime Fool contributor Rick Munarriz is a Netflix shareholder and plans to stay that way. He has been a subscriber and investor since 2002. T he Fool has a disclosure policy. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.