A deal isn't always a deal…

You probably remember a few posts back reading about a dramatic move I made to clobber my out-of-control cable bill. I dropped all the premium programming and scaled back the digital cable too. The net savings is somewhere in the $70 per month range. I was having a terrible time justifying premium cable programming because I ended up watching very few movies each month and the original programming offered by HBO and Showtime, while outstanding, isn't plentiful enough to justify the cost.

In lieu of the overpriced cable services, I had planned to subscribe to one of the DVD-by-mail providers. In case you live under a rock and haven't heard about the DVD-by-mail services, you establish a list of movies that you'd like to see and then the company mails them to you in an envelope that doubles as the return envelope when you are finished with the DVD. When you return a movie, the service provider looks at your queue and ships out the first movie from the top of your queue that they have in stock.

In the past, I have subscribed to both Netflix and Wal-Mart DVD-by-mail services. It's all quite simple and very efficient. Both Wal-Mart and Netflix have distribution centers very near my home, so a DVD mailed today arrives within one or two days. When Wal-Mart launched their service, it was priced about $5 per month below a fairly comparable offering at Netflix. I had planned to rejoin one of these services once I got the cable bill under control.

Netflix has been in the news a lot lately because of the current and impending competition they face. While Netflix is pretty much the recognized genesis of this type of service, with the behemoth Wal-Mart already in the game and a suspected Amazon.com offering on the horizon, the playing field could get very crowded and competitive rather quickly.

I decided to conduct a test. I would try both Wal-Mart and Netflix for one month and keep the service that was the best. I wrangled a free month from Netflix, so didn't have to pay both services to conduct my little experiment. Part of Netflix' press coverage of late was that they slashed the price for their standard offer (3 DVDs out at a time, unlimited DVDs per month) from about $22 to $17.50ish. This was, of course, in response to the current and impending competition. Wal-Mart still beats this slightly, but not by enough to really matter.

The reason I needed to do a "live" comparison of the two services is because, on the outside, they both look pretty much the same. While Netflix is definitely the leader in non-mainstream movies, they both have all the new stuff and a decent selection of older movies as well. But the catch here is, until you are actually making your selections online and populating your rental queue with movies you want to see, there is no way to know if they have the movie in stock and ready to ship. So, while it appears that the two competitors have comparable services, the reality is far from the appearance.

It has been years (literally) since I have been an avid movie-goer. Oh, I do catch the odd mega-hit here and there with Donna, but not with any regularity. So I am way behind on all the "popular" movies of this year and last. As I began to populate my rental queue on the Wal-Mart site a disturbing trend emerged; anything that was a new release, or even less than 1 year old, wasn't available and had a "Long Wait" or "Very Long Wait" status. The only movies that were available for immediate shipment were very old ones or the real dogs that nobody wanted to see anyway.

The scene at Netflix was completely different. As I added movies to my rental queue I was surprised to find that even the newest and most popular releases were available for immediate shipment! I was suspicious. Certainly, that had to be some sort of trickery. I placed three brand new releases right at the top of my queue, fully expecting them to be passed over in my initial shipment for older, less-in-demand movies further down on my list. Much to my surprise, two days after signing up, The Bourne Supremacy, The Terminal, and Saved! (all new release movies) showed up in my mailbox. Amazing!

There's no telling how Netflix will fare with Amazon's entry into the market. If their past strategies are any indication, they will be very aggressive. But for now, Wal-Mart's DVD-by-mail service is just a pale shadow of the amazing efficiency of Netflix.