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"Blockbuster has two pro...
"Blockbuster has two problems in terms of customers: some of their best customers, frequent renters, would prefer to work with Netflix," said Forrester Research analyst Josh Bernoff. "Having a subscription will make sure that no more of their customers will stray. But the bigger problem for Blockbuster and even Netflix is video-on-demand."
Waiting for VOD
Ideas about instant digital access to movies via TV have been bandied about for years with little effect. But now, major cable providers such as Comcast and AOL Time Warner are getting behind video-on-demand services, testing different models in various markets.
Forrester estimates that by the end of the year, 8.5 million people will have video-on-demand access through their cable or satellite service. Within five years, more than 30 million people will have access. The threat to the likes of Blockbuster is that more people will stay home and order films right from their TV sets.
"(Video on demand) is becoming a standard offering of cable," Bernoff said. "We're not suggesting that (rentals) will go away, but that a nice chunk of it will go away."
Blockbuster's subscription program will prevent some frequent renters from converting to Netflix, he said, but "three years from now those renters are likely to be VOD subscribers, so this is short term."
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