Yup, you read that right.
As part of a special offer, Blockbuster (NYSE:BBI) is offering a six-month membership on its standard three-movies-out-at-once option for $15.99, complete with two monthly in-store coupons for free movie and game rentals. The latest price cut, though temporary and not directly advertised, gives Blockbuster the lowest price in town, even after Wal-Mart's (NYSE:WMT) latest markdown.
What does one have to do to get this offer? Merely try to cancel your service with Blockbuster during your initial two-week trial period as I did yesterday. The website automatically implores you to stay, asks you why you want to leave, and offers you either an additional month for free or the aforementioned $15.99 promotional deal as enticement. How's that for customer appreciation?
Even as a regular Netflix (NASDAQ:NFLX) subscriber, I couldn't help but be impressed with Blockbuster's resilience. (In comparison, when I sampled Wal-Mart's service a year ago, they let me cancel with nothing more than a polite goodbye.) If Blockbuster is to survive, the company needs to get accurate data on reasons behind customer churn. Although this is a pretty expensive attempt at data collection, it's hard to see how Blockbuster has any choice in the matter. Its business model is under heavy attack -- especially if Amazon.com (NASDAQ:AMZN) joins the fray -- and the company has to retain customers, even if it means handing out a month of service for free to people who wanted to leave.
Whether Blockbuster's latest attempt at gaining market share will work remains to be seen. It sure won't be easy -- Netflix was able to comfortably grow its subscribers despite a lower-priced Wal-Mart option for more than a year. When the price difference is small, small differences in service start to matter. Although I'll stay with Blockbuster for that one more month of free service -- come on, it's free -- I'll switch back to Netflix and its $17.99 equivalent plan once the promotional offer expires. Simply put, I think the additional features are worth the extra $0.50.
For now, investors should be aware that Blockbuster's total subscriber count remains cloudy and, if these latest promotional offers are any indication, may remain opaque for some time to come. When accepting the offer, I signed a contract to let Blockbuster charge my credit card $0.00 for one month for its service -- so under the technical definition of the term I am now a paying subscriber. While giving potential cancellations an extra month of service will not be represented in the churn numbers it certainly won't add cash to the bottom line either.
Fool contributor Marko Djuranovic owns shares of Netflix and no other company mentioned in this article.
