Well played, Blockbuster
The DVD retailer will begin offering video game rentals by mail this year. It will launch a pilot program with select Total Access subscribers during the second quarter, with plans to roll it out nationally later this year.
No one needs to tell me that renting video games is an iffy business. Games cost way more than DVDs. They also age quicker. A company can rent a copy of The Godfather on DVD for as long as the platform is relevant. You can't squeeze more than a few months of use out of a sports franchise title with annual installments.
So what? Isn't that simply a matter of pricing a service accordingly? Besides, GameStop's
How could Netflix have blown this golden opportunity to beat Blockbuster? Both companies have the distribution centers to provide overnight delivery throughout most of the country. Even if delivering games is never much of a profit center, offering it alone could be a retention tool, like the Web streaming it provides at no additional cost to subscribers.
Netflix is usually one step ahead of the competition. It slashed rates when it feared that Amazon.com
So surely it saw this coming. Ignoring the threat, apparently, is dumb. Dismissing the threat is even dumber.
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Longtime Fool contributor Rick Munarriz loves playing video games but doesn't own shares in any of the companies mentioned in this story, save for Netflix. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.