As for so many other consumer services, the Internet has now made it more convenient for people to choose the entertainment that they want, and have it delivered right to their homes. Terrific examples of this are the DVD movie rental services that ship each DVD to your home, along with a postage-paid envelope to return the DVD at your leisure — with no late fees or fixed showtime schedule.
The story goes that this business model got started when California resident Reed Hastings, upon getting back from a trip, returned a movie to the rental store, was hit with a fine, and vowed to do something about it. The company he founded, NetFlix, began offering DVD rentals through the mail, in 1998, and has been growing rapidly ever since then. In fact, NetFlix alone now has over 2 million subscribers. The store that gained $40 in late fees from Hastings, but since then lost significant market share to NetFlix? Blockbuster.
In this article, we will examine and compare the services and costs of NetFlix, as well as its two major rivals, Blockbuster Online and Wal-Mart DVD. Each of the three took different routes into the online DVD rental business. NetFlix is the only pure Internet player, having no brick-and-mortar retail outlets. Seeing NetFlix quickly eating into its market share, Blockbuster purchased one of the pioneers, Arizona-based Film Caddy, and spent a year learning from their operations. Wal-Mart, in typical fashion, copied from the pioneers and was competing largely on lower prices — until NetFlix's recent rate cuts.
Features and Plans
Despite their differences, the three major DVD rental services operate in the same manner: As a new customer, you sign up for a free trial period, by creating an account on the service's website. Once approved, you begin adding movie titles to your movie queue. Movies can be found by searching by name, or exploring categories of genre, popularity, etc.
As soon as you have some movies selected, your chosen service will mail some DVDs to you, based upon your prioritization of them and their availability in the service's distribution centers. The maximum number of DVDs that you can have checked out varies depending upon which plan you have chosen. The most common plan, referred to as "3-out", is to have three DVDs checked out at any time. Every time they get back one of the DVDs you had out, they will send you a different movie from your queue. Conveniently, they pay for First Class postage both ways.
Each movie title added to your queue is placed at the bottom, which means that it will have the lowest priority, because the rental service will try to send you those titles which are highest in your queue. As a result, you should periodically check your queue to make sure that the movies you want to see next are at the top of the queue, and that you have enough titles in your queue so that the service can always send out DVDs to replace the ones you have watched and returned.
All of these DVD rental services allow you to rate movies that you have seen, using a simple five-star rating system. It is worth taking the time to do the ratings, because then the movies recommended to you by the service will be much closer to your tastes. Each service can show you the details of a particular movie, including a synopsis, actors' and actresses' names, and similar movies.
The aforesaid services have various plans and prices. Unless otherwise noted, each plan is "unlimited", which really means that the total number of movies you can see each month is limited only by how fast they are mailed to you and how fast you mail them back. (All prices here do not include sales tax, including California.) NetFlix offers, by default, a 3-out plan for $17.99 per month, 5-out for $33.99, and 8-out for $49.99. Their Economy Plan, for $14.99, is 2-out, limited to a total of four movies per month. Blockbuster offers 3-out for $19.99 per month, 5-out for $29.99, and 8-out for $39.99. You also get two free coupons for in-store rentals. The low price leader, Wal-Mart, offers 4-out for $21.94 per month, 3-out for $18.76, and 2-out for $15.54.
Selection and Speed
In terms of movie selection, NetFlix and Blockbuster have the most movie titles on tap: over 25,000 each. Wal-Mart has over 16,000. This difference in selection would be of no consequence to a customer who watches mainstream American movies exclusively. But if you like foreign, independent, or less popular movies, you will likely find Wal-Mart's menu to be rather bland.
Being able to request the movies you truly want to watch plays a big role in how satisfied you will probably be with a particular rental service. But perhaps even more influential is the turnaround times, especially if you are on a 2-out or 3-out plan. Not being able to find obscure movies to add to your queue, will prove less frustrating than not being able to receive any movie at all in a timely manner.
NetFlix's website claims that more than 80 percent of their customers enjoy one-day delivery. How are they able to achieve this? By having a large number of distribution centers scattered across the U.S. — 46, to be exact. The typical transit times for DVDs mailed from the (far fewer) Blockbuster or Wal-Mart distribution centers can vary significantly, especially on weekends. I have tried all three services, and found that the average transit time is two days for Blockbuster, and 1.5 days for Wal-Mart.
You can take advantage of the services' free trial periods, during which time you can try each one at no charge. NetFlix and Blockbuster offers 14 days, while Wal-Mart offers 30 days. If for various reasons you are not pleased with all three of them, then you could always check out one of the smaller competitors in the business. DVD Avenue and RentDVDHere have plans similar to NetFlix, yet distinguish themselves by stocking computer games, as does Blockbuster. However, their movie selections are but a fraction of the major players, and the typical transit time will be two to five days, unless you live close to their distribution centers in Maryland and Washington, respectively.
If you sign up with one of these rental services, regardless of which one, you will undoubtedly enjoy the convenience of having DVD movies mailed to your home, and being able to return them simply by posting them whenever you like. The money you save by avoiding video store late fees and gasoline costs just to drive there, could pay for any number of items — even a home popcorn machine.