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How it works
Most companies operate on the following model:- The customer joins the rental service creates a list of titles they wish to watch.
- Titles from the list are mailed to the customer.
- The customer watches the films and then sends them back to the rental company.
Examples of online rental companies Blockbuster Video Online, Netflix, eHit,and LOVEFiLM.
Variation: Variations exist; for example, Some companies also offer video game rentals while others offer music. Redbox allows a user to reserve DVDs or Blu-Ray discs online to retrieve and return the DVD at Interactive kiosks located in various retail establishments.
Comparison websites can be used to compare the features and price of various online rental DVD companies.
Types of plans
Most companies provide variations on five basic types of membership plans:- "Unlimited"
- These plans have no maximum on the number of movies one can rent per term, although there is a limit on the number one may have out at any one time (the higher this limit, the higher the monthly charge). Most of the plans at Netflix, Blockbuster, etc. are of this type. "Unlimited" is something of a misnomer, since one will be limited by the delivery time of the postal service involved, the distance between the customer and the company's warehouse, etc. The company may also take active steps to reduce the number of discs shipped—see the "Throttling" section below.
- "Limited", "capped", "monthly maximum"
- These plans have a limit on the number of discs customers may have out at any one time, and also a maximum total of discs that can be rented during each billing period (usually monthly). This provides a cost ceiling for the supplier, and these plans are usually cheaper than unlimited plans. Some plans allow for additional shipments at extra cost once the maximum has been reached. Usually no credit is given if usage is below the maximum, although plans that allow this sort of "carry-over" are not completely unknown.
- "Package"
- Instead of each disc being sent and returned independently, a "package" plan sends a certain number of disks together, and one returns all the discs in a single package as well. A common scenario allows for two packages to be outstanding, and subsequent packages ship as a previous one is returned.
- "Individual Rentals", "pay-as-you-go"
- A plan of this type would allow individual rentals for a fixed fee (perhaps varying by type/age/popularity of the title), with no monthly fee. Since companies rely on the monthly fees of low-volume renters to make up for those whose shipping costs approach or exceed what they are paying, there is little incentive to offer such a plan, and the rental price would likely have to approach or exceed store costs. Still, it would be a useful alternative for occasional or periodic renters who want access to the huge selection of online companies or the advantages of mail rental, yet do not want the fixed monthly cost.
- "Peer to Peer Trading"
- There is also a completely different variant which might be termed "peer-to-peer". Individuals are able to exchange items directly with other consumers, using a company's services to provide matching between customers, mailing envelopes, credit for items traded, etc. Examples include Peerflix and SwapSimple.
- "Season Rental", "Series Rental"
- These are company controlled package plans based on a set of predetermined settings by the company. Season rental plans allow customers to rent entire seasons of television shows in single shipments; the customer can not break up or modify the package. Customers often can still queue various packages together for uninterrupted service; returning the first package in order to have the next one shipped (i.e. Star Trek season 1 followed by season 2). Such plans are usually allotted either by show, or by season, for a set price.
- Series plans allow customers to rent entire television or film series in bulk; often in a single shipment, (i.e. Friends TV show or the Baby Cart film series) but otherwise work identically to Season Rental plans. (The terms “Season” and “Series” are reversed in the UK
"Throttling"
Given sufficiently speedy mail delivery times, customers on "Unlimited" plans who turn around their discs quickly enough can receive enough shipments in a month that the company's actual cost of delivery exceeds the subscription fee, making the customers unprofitable. Even below this point, higher volume customers are by definition less profitable than customers who receive fewer discs per month. If these customers become too numerous, there are various measures which the rental company can take. One is the so-called "throttling" approach, which received a fair amount of publicity in regards to Netflix (which refers to the practice as a "fairness algorithm"). In this case, high-volume customers may experience a greater likelihood of (slower) shipments from alternate warehouses, when the nearest shipment centre does not have the requested movie. Also, if there is a high demand for a particular movie, it is more likely that an infrequent renter will get priority over the frequent renters, with the latter receiving a movie further down on their queue. They are also less likely to receive replacement shipments on the same day a disc is received. Similar "fair use" caveats can be found in the Terms and Conditions of leading UK companies such as LOVEFiLM. In Canada, Zip.ca switched to "Capped" plans (with additional shipping charges for rentals over the cap) in part to avoid implementing "throttling".LOVEFiLM came under scrutiny from users over its claim to offer "unlimited" movie rentals. Some users reportedly found the company used long delays at the shipping stage to reduce the number of films a month a customer can rent. The company was subject to a dispute by the Advertising Standards Authority over the use of the word "unlimited" in their advertising. It was revealed that they practiced throttling. The company itself claimed that this "fair usage" policy means all customers get a similar service.
On March 2, 2006, Blockbuster announced that their service does not implement throttling. "We don't prioritize our customers' movie fulfilment based on how often they use our service, and we don't limit the number of movies a subscriber receives each month," according to Senior Vice-President Shayne Evangelist. However, the Terms and Conditions each customer has to agree to in order to subscribe to the service states "BLOCKBUSTER Online reserves the right to determine product allocation among members in its sole discretion. In determining product allocation, we use various factors including, but not limited to, (i) the historical rental volume for each subscriber, (ii) historical number of outstanding rentals relative to the maximum number of outstanding BLOCKBUSTER Online Rentals allowed under a subscriber's plan, and (iii) the average rental queue position of BLOCKBUSTER Online Rentals that have shipped to a subscriber in the past." concerning their Selection and Allocation of Product, which could be read as contradicting this announcement.
Marketplace summaries
This form of film rental is closely tied to the mode of delivery. The performance of the postal service in various countries can differ, and delivery times also depend in part on a country's geography. A relatively small, densely populated area such as Great Britain poses different delivery challenges to a large area such as the United States (where the major companies have developed a network of regional distribution centres). There are also country-specific implications of the DVD region coding system / Blu-ray Disc region coding system, and even studio distribution rights within regions. For these and other reasons online Blu-ray/DVD rental companies tend to operate in a single country, and even should a company expand to multiple markets, local delivery infrastructure would be required in most cases, as cross-border shipping is impractical in all but speciality cases. Relative pricing levels may also vary depending on the market, the local wholesale cost of Blu-ray/DVD product, etc. Following is a summary of the main English-speaking markets.North and South America
United States
Netflix is the prototype for the entire industry and still the dominant company in the U.S., ending 2008 with 9.39 million customers. Blockbuster Video claimed 1 million online customers in August 2005, 2 million by March 2006, and finished the first quarter of 2007 with 3 million. There are no recent published numbers for Blockbuster Online since 2007. Walmart briefly entered the market as well, but withdrew in 2005 and now has a cross-promotional agreement with Netflix.There are a number of smaller companies, some of which target specific niches: eHit, the first such niche company, came online in 2000 targeting fans of Asian films; specifically Japan, China, and Korea, expanding to include other countries’ films over time. eHit pioneered some rental and user options later adopted by the majority of online rental companies: the ability to filter previously rented films from standard browsing views and the ability to rate movies that have not been rented from that company. eHit was also the first company to rent entire series as a single, set price rental.
Redbox offers online Blu-ray and DVD rentals, but requires the customer to receive the movie at a kiosk. Kiosks are located primarily at grocery stores, gas stations, and Wal-Mart, as well as McDonald's, Hardee's, and Carl's Jr. restaurants. Adult DVDEmpire and GoFlix.com are examples of adult-only rental companies offering a wide range of adult entertainment. CinFlix offers only imported films released outside of the United States in non-region 1 coding, including some American films, targeting the vast English As Second Language market. PuritanPicks.com and ChristianCinema both offer Christian entertainment. BushidoDVD.com came online in 2005 and is an example of an instructional DVD rental company offering martial arts training videos for rent.
Canada
Estimates put the number of Canadian subscribers at 70–80,000, with Zip.ca having around 50,000.[citation needed] Other competitors include DVDLink.ca, Kaku.ca, Cinemail.ca, Videomatica.ca and Canflix.com. A common feature in Canadian plans is a refill feature where a customer is mailed by the rental company the replacement disc as soon as the customer has indicated that a DVD has been returned in the post. The extent and availability of refill varies by company. Some companies also have a vacation or suspension feature.Mexico
One of the leading companies in this market is DVD2GO, although it only has service in the Monterrey and Guadalajara areas for now. They utilize their own delivery personnel with motorcycles, so delivery times are typically faster than the normal post.Blockbuster Online started DVD Rentals in Mexico during 2007. Initially, the service was only for condos & corporate offices; In 2008, they're going to expand the coverage in open zones (home deliveries through motorcycles personnel).
Brazil
Blockbuster Online started DVD rentals in Brazil during 2006 and now offers Blu-ray plans as well. The 3-disc unlimited rental plan costs R$49.90/month with unlimited exchanges [1]. Along the decade, the number of online rental services in Brazil has rocketed up. Among the most popular are NetMovies and Pipoca Online.Europe
United Kingdom
Given the relatively small geographical area and high population density of the UK, online DVD rentals have some differences from in the US, as a single shipping facility can serve the entire country. There are a large number of companies, but many are actually separately branded versions of the dominant company, LoveFilm, which provide the website, fulfilment and support services. In most cases the partner is a company with access to a large existing customer base (supermarket chains, newspapers, media companies, etc.) which it can direct to its branded site. Each brand may have slight differences in price, quantity, website features or ancillary benefits, but the actual DVD service will be from the same source.In April 2006, LoveFilm merged with its major rival Video Island, which had operated ScreenSelect and other brands,, and in February 2008, LoveFilm acquired Amazon's DVD rental business in the UK and German markets. In return, Amazon became the largest shareholder of LoveFilm. Remaining competitors include Blockbuster.
On 9 September 2009 DVD rental comparison site 'Choose DVD Rental' pointed out that market pressures were forcing many smaller UK online DVD rental sites to shut down.
Asia/Oceania
Australia
There are several providers in Australia, the most prominent being Quickflix (listed on the Australian Stock Exchange) and BigPond Movies. Information on the Quickflix site lists over 43,000 DVD titles on offer. Quickflix's has over 60,000 subscribers and is considered market leader.New Zealand
There were three online DVD rental companies in New Zealand, all offering flat-rate packages. The three companies were DVD Unlimited, Fatso and Movieshack.On June 7 2008 all three companies merged into Fatso, owned by SKY Network Television.
Singapore
Hollywoodclicks and Videohub are the two most established online DVD rental services in Singapore. Hollywoodclicks was the first to market, followed by Video Ezy Online. Video Ezy Online rental service was shut down at the start of 2009 and was converted to a home delivery service.India
There are several online DVD rental services in India, all running their own delivery systems and logistics. Unlike online DVD rental companies in other countries, online DVD rental services in India do not use the postal service as a means of delivery or exchange.India's first online DVD rental service Clixflix started in 2004, and was followed by several others like SeventyMM, EZEVID,MovieMart, Madhouse, Cinebox, CineSprite, CatchFlix, HomeView and ClixFlix in no particular order. Madhouse and Seventymm have merged and the combine is now known as Seventymm.
The model has been tweaked in India to suit the local market place. Cinebox serves in Ahmedabad city only with their own shipping service. Clixflix serves members through stores, phones, SMS and the internet. Madhouse uses drop boxes. SeventyMM and Catchflix operate pure online models. Cinesprite operates a multiple delivery model. Another powerful contender is Bigflix from the Reliance Anil Dhirubhai Ambani (Reliance ADA) Group one of India's largest business houses.
Japan
Major online rental Blu-ray Disc and DVD companies are Rakuten rental and Tsutaya discas and PosrenAfrica
South Africa
The first company to use this model in South Africa was PushPlay, launched in July 2006. Initially they delivered to Cape Town only, and they deliver using the postal service. DVDs Online offer a similar service, but courier to the door. They are therefore more expensive, but offer quicker deliveries. BigPix launched in Durban in June 2007, also using the Post Office.See also
- Automated teller machine
- Blu-ray Disc
- HD DVD
- DVD
- VHS
- VCD
- Interactive kiosk
References
- ^ Rent Film Online 2008
- ^ "Cinemail.ca Frequently Asked Questions". Cinemail.ca. 2007-03-28. http://www.cinemail.ca/mem_faq.cfm?id=17. Retrieved 2007-03-28.
- ^ . http://www.boston.com/business/articles/2006/02/10/throttling_angers_netflix_heavy_renters/.
- ^ What is "throttling" and does Netflix "throttle" its members?, Netflix, September 10, 2007, . Retrieved on 2007-09-12.
- ^ Advertising Standards Authority adjudication upholding a complaint against LOVEFiLM. 9th August 2006.
- ^ "BLOCKBUSTER Online Doesn't Throttle Customers!". Blockbuster Inc.. 2007-03-02. http://blockbuster.mediaroom.com/index.php?s=press_releases&item=666. Retrieved 2007-03-28.
- ^ "Blockbuster Online - Terms and Conditions". Blockbuster Online. 2007-11-03. http://www.blockbuster.com/corporate/termsAndConditions. Retrieved 2007-03-28.
- ^ a b "E-commerce and Video Distribution:DVD and Blu-ray". http://ecommerceandvideodistributiondvd.blogspot.com/.
- ^ "Netflix 2008 Annual Report". Netflix. 2009-05-28. http://www.shareholder.com/visitors/dynamicdoc/document.cfm?CompanyID=NFLX&DocumentID=2609&PIN=&Page=2&Zoom=1x&Section=69563#69563. Retrieved 2009-08-06.
- ^ "Blockbuster reports First Quarter 2007 results"
- ^ "Walmart.com and Netflix Announce New Promotional Agreement". Netflix. 2005-05-19. http://www.netflix.com/MediaCenter?id=5281. Retrieved 2007-03-28.
- ^ "LoveFilm and Video Island merge to create Europe’s leading online home entertainment group". LoveFilm. 2006-04-06. http://www.lovefilm.com/corporate/news_item.html?item=3578. Retrieved 2007-03-28.
- ^ LoveFilm to Acquire Amazon’s European DVD Rental Business - Amazon to become largest shareholder of LoveFilm
- ^ LoveFilm website
- ^ Amazon buys into Lovefilm
- ^ "Online DVD Rental Little Guys Disappear". choosedvdrental.co.uk. 2007-09-09.
- ^ Home | DVDs Online
- ^ BigPix
