Netflix vs. Amazon Unbox: Netflix still wins

Tom Moertel — Sat, 07 Apr 2007 12:20:00 -0400

When Amazon.com announced its its Unbox video-download service, I was skeptical. Compared to the reigning champion – the DVD – Unbox looked like a loser:

Unbox burdened its customers with DRM and the annoyances that come with DRM
Unbox required the use of a Windows-only player application
Unbox movies lacked “standard” DVD features such as surround sound, alternative audio tracks, commentaries, and bloopers

The first two points were deal-breakers, so I wrote off Unbox and did my best to ignore it.

And then Amazon hooked up with TiVo. Beaming movies directly into my TiVo box eliminates the need to deal with DRM and Windows annoyances. My two big concerns sidestepped, I decided to give Unbox another look. I still wouldn’t want to buy Unbox-to-TiVo movies because they lack the typical DVD extras and would tie up storage space on my TiVo, but Unbox might be a decent way to rent the occasional movie – if the price were right.

Is the price right?

That depends on how the price of Unbox compares with the price of my current rental option of choice, Netflix. Both services offer immediate access to good movies: Unbox by on-demand downloads, Netflix by ensuring that I almost always have a DVD or two in the house.

To compare Unbox with Netflix, I had to figure out how much a rental costs me with each service. With Unbox the figuring was easy because each rental has its own price tag, typically $3.99.

With Netflix, it’s a bit trickier because the rental price depends upon how many DVDs I rent in a month. I pay a monthly fee of $17.99 and can rent as many DVDs as I want, at least until the infamous Netflix rate throttle kicks in. To determine how many DVDs I rent during the typical month, I had to download my rental history. (If you’re a Netflix subscriber, you can get your history from the Returned Rentals page.) After downloading my history, massaging it into the desired form, and loading it into R, I generated a stem-and-leaf plot to visualize the number of DVDs I have rented during each of the 76 months I have been a Netflix subscriber:

> stem(monthly.rental.counts, scale=2)

  The decimal point is at the |

   1 | 0
   2 | 000
   3 | 0000000
   4 | 00000000000
   5 | 000000000000
   6 | 000000000000000
   7 | 0000
   8 | 000000
   9 | 00000
  10 | 0000
  11 | 0
  12 | 00
  13 | 00
  14 | 00
  15 | 0

It looks like I have rented as few as one and as many as fifteen DVDs in a month. Most months, however, I rent between three and ten DVDs. On average, I rent about 6.4 DVDs per month:

> summary(monthly.rental.counts)
   Min. 1st Qu.  Median    Mean 3rd Qu.    Max.
  1.000   4.000   6.000   6.408   8.000  15.000

Thus my average rental price is about $2.80 per DVD:

> 17.99 / 6.4
[1] 2.810937

Now I can make my Unbox-vs-Netflix price comparison. For me, it looks like Unbox is about 40 percent more expensive than Netflix:

> 3.99 / 2.81
[1] 1.419929

So the price of Unbox is not right, at least for me.

Testing Unbox-to-TiVo rentals

Because Amazon is offering free $15 credits to TiVo owners, I decided to give Unbox a test drive. My test rental was The Illusionist. Renting the movie was easy (just one click), and shortly thereafter Unbox automatically downloaded the movie to my TiVo box. When I played the movie, however, I was disappointed with the video quality. I easily noticed banding artifacts, which were distracting at times. On the whole, the viewing experience was inferior to watching a DVD.

Netflix still beats Unbox

For me, then, Unbox is still a loser. It costs more and delivers less than DVD rentals via Netflix.

A note to my friends at Amazon.com

I would be happy to give you my business, but right now you’re not earning it. If you want me as an Unbox customer, here is the recipe for winning me over:

Let me easily download movie rentals to my TiVo. (Check.)
Offer true DVD quality or better. (You’re not there yet.)
Sell the rentals for less than $2.80. (You’re not there yet.)

Until then, I’ll have to give my money to Netflix.

Cheers,
Tom

Update: edits for clarity; added tags.

"Netflix vs. Amazon Unbox: Netflix still wins" by Tom Moertel

Wed, 12 Nov 2008 10:33:16 -0500

bond: Thanks for your comment. In response, I don’t think I am discounting the extra convenience of Unbox. It’s just that after having measured that extra convenience (by actually using Unbox in comparison to Netflix), I have found it to be small.

"Netflix vs. Amazon Unbox: Netflix still wins" by bond

Wed, 12 Nov 2008 02:20:54 -0500

i d say you are discounting the ‘convenience’ of renting at the click of a button and not having to deal with the hassle of waiting for an envelope and stuffing things into a player and then returing them. UnBox is a true ‘on demand’ offering. you can rent whenever you want, as many as you want.