With the economy the way it is, consumers are looking to save money wherever they can. Families are not going out as much and staying home in an effort to save a few bucks here and there. So it's not a surprise when we see the rising popularity of in-home entertainment. With DVR, On-Demand, and Pay-Per-View it is now easier then ever to enjoy a nice night at home. You would think that video rental stores like Blockbuster would be thriving in this bad economy. Unfortunately that's not the case.

When Netflix launched in 1999 it changed the way people rented and watched movies. For a flat monthly rate you would have access to the Netflix web site where you can pick movies to be mailed to your house in pre-paid envelopes. Eliminating any need or reason to make a trip to your local video store. Due to this new hassle free and inexpensive method of movie renting Blockbuster has been feeling the heat.

When you would go to the video store and rent a movie, if you didn't return it on-time you would be charged a late fee. With Netflix pricing strategy and no time restriction on how long you can keep a rental, it provided customers with another reason not to use Blockbuster.

Blockbuster was not going down with out a fight however. Blockbuster adopted a "no late fee" policy in there retail stores. Well...kind of. If you kept a rented DVD for more then 5-days after its due date, Blockbuster would automatically deduct the retail cost for the DVD directly from your bank account. By this time it was obvious that was not enough to compete with the fast growing Netflix. So Blockbuster decided to then take them head on.

In August 2004 Blockbuster launched a similar online DVD rental service. It worked the exacted same way as Netflix, but with Blockbuster having retail stores it gave them an edge on Netflix. Instead of mailing back the DVD and waiting a day or two for a new one, Blockbuster gave you the option of returning the movie to their retail store for a new DVD right then and there at no charge. Using the advantage of their retail stores, Blockbuster has made their presence known as one of the top two online DVD rental services in the country.

Netflix had a response. In 2007 Netflix offered their customers the option to watch movies directly on their computer. They already use their computers to pickout what DVDs they wanted to be mailed to their homes, so it made sense to offer select titles to watch for free on your computer without having to wait for the DVD in the mail.
Netflx delivered another blow to Blockbuster early this year when they signed a deal with video game giant Microsoft. Allowing any XBOX 360 owner to sync their XBOX live account with their Netflix account. Now you can put any movie from your Netflix queue directly on your XBOX 360 to watch on your TV.

With Netflix offering thousands of titles at their customer's fingertips daily, it has made it almost impossible for Blockbuster to compete. Not to mention the new RedBox kiosks that seem to be popping up everywhere. RedBox are little kiosks that are placed at local supermarkets and pharmacies, (usually across form a blockbuster) which offers newly released DVD's for a dollar a night. Blockbuster new releases are $4.99 for 2-nights.

Due to the overwhelming pressure of Netflix, and RedBox, Blockbuster was forced to close 960 of their 3,700 retail stores this year. No one knows how much longer Blockbuster can hold out. I imagine it can't be too much longer.