Online DVD rental

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Online DVD rentals allow a person to rent DVDs by mail. Generally, all interaction between the renter and the rental company takes place through the company's website.

Contents 1 How it works 2 Types of plans 3 "Throttling" 4 Marketplace summaries 4.1 North and Central America 4.1.1 United States 4.1.2 Canada 4.1.3 Mexico 4.1.4 Brazil 4.2 Europe 4.2.1 United Kingdom 4.2.2 Switzerland 4.2.3 Germany 4.2.4 Ireland 4.2.5 Turkey 4.3 Asia/Oceania 4.3.1 Australia 4.3.2 New Zealand 4.3.3 Singapore 4.3.4 India 4.3.5 Japan 4.4 Africa 4.4.1 South Africa 5 References

[edit] How it works

Most companies operate on the following model:

• The customer joins the rental service and creates a list of titles.
• DVDs from the list are mailed to the customer.
• The customer watches the DVDs and sends them back.

Most companies will let customers keep the DVDs for as long as they want; customers are, however, limited to a set number of discs out at any one time. Once a disc is returned, another is sent out—except for pre-paid memberships. Some companies or plans may have a limit on the total number of DVDs rented in a month. Memberships are usually billed monthly, and includes postage both ways. Some companies also offer video game rentals.

An example online DVD rental company is the American company, Netflix.

Variation: A variation of online rental, is a company such as Redbox, which allows a user to reserve a movie online to retrieve and return the DVD at interactive kiosks located in various retail establishments.

[edit] Types of plans

Most companies provide variations on five basic types of membership plans:

"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.^[1]

"Package" 

Instead of each disc being sent and returned independently, a "package" plan sends a certain number of disks together at fixed intervals (often weekly), 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.

"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 (ie. 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.

[edit] "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"^{[citation needed]}). In this case, high-volume customers may experience a greater likelihood of (slower) shipments from alternate warehouses, when the nearest shipment center 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.^[2] 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".

On March 2, 2006, Blockbuster announced^[3] that their service does not implement throttling. "We don't prioritize our customers' movie fulfillment 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."^[4] concerning their Selection and Allocation of Product, which could be read as contradicting this announcement.

[edit] Marketplace summaries

This form of DVD 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 centers). There are also country-specific implications of the DVD region coding system, and even studio distribution rights within regions. For these and other reasons online 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 DVD product, etc. Following is a summary of the main English-speaking markets.

[edit] North and Central America

[edit] United States

Netflix is the prototype for the entire industry and still the dominant company in the U.S., ending the first quarter of 2007 with over 6.8 million customers.^[5] 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.^[6] Walmart briefly entered the market as well, but withdrew in 2005 and now has a cross-promotional agreement with Netflix.^[7]

There are a number of smaller companies, some of which target specific niches: eHit, the first such niche company, came online in 2000. They targeted fans of Asian films; specifically Japan, China, and Korea. In 2003 they expanded their library to include a limited number of American films and again in 2006/2007 they added Thai and some European films. eHit substantially added to the industry as a whole by devising some options later adopted by the majority of online rental companies: the ability to filter previously rented films from standard browsing views, the ability to rate movies that have not been rented from that company, and the ability to filter previously rated films from standard browsing. eHit was also the first company to rent entire series as a single, set price rental.

GameZnFlix offers video game rentals, along with movies, as part of their subscription package, while content-edited ("family friendly") companies such as CleanFlix and CleanFilm offer films that have been modified in order to suit certain moral groups. Redbox offers online DVD rentals, but requires the customer to pick up the DVD either at a participating grocery store or McDonald's restaurants. Adult DVDEmpire is the largest adult-only rental company 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.

Software solutions such as DVD Rental Software, W3Rent provides online e-commerce systems that let anyone start their own online movie or game rental business.

[edit] Canada

The major company (ZIP.ca) is far larger than any rival. Estimates put the number of Canadian subscribers at 50–60,000, with ZIP.ca having around 36,000. Other competitors include 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.

[edit] 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).

[edit] Brazil

First video game rental service in Brazil "EasyPlay" offer rental service since 2007 and keep increasing his customers database and implement new features like "pay as you go" rental model or "subscription" based.

[edit] Europe

[edit] United Kingdom

Given the relatively small geographical area and high population density of the UK, online DVD rentals have some differences from in the U.S, 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 "powered by LOVEFiLM" partner brand 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 itself merged with its major rival Video Island, which had operated ScreenSelect and other brands,^[8] creating an operation with 300–400,000 subscribers^[9] and an estimated 60-70%^[10] share of the UK market. Competitors include Blockbuster, and a number of small and medium-sized providers, such as MovieMail.

[edit] Switzerland

One of the first dvd rental service "FilmExpress" in Switzerland provides rental service using both rental models - subscription based and pay as you go.

[edit] Germany

Some of the companies offering online DVD rental in Germany are glorimedia.de, lovefilm.de(formerly amazon.de) , Amango and Videobuster.de.

[edit] Ireland

There are two providers in Ireland — Screenclick and Moviestar.ie, after Busy Bee DVD was bought by Screenclick in 2007. Screenclick was reportedly purchased for €3 million by British firm LOVEFiLM in 2006, but this is now looking unlikely as Lovefilm.ie now points to a rival company, and records lodged with the Companies Registration Office hint towards no conclusion to the deal.^[11], its 15,000 subscriber count at the time reportedly now increased to over 40,000.^[12] Moviestar is the most recent entry, and currently claims around 15,000 customers.^[13]

[edit] Turkey

Some of the online rental DVD companies are Film Servisi, Evde Izle and DVD Sokagi.

[edit] Asia/Oceania

[edit] Australia

There are several providers in Australia, the most prominent being BigPond Movies (owned by Telstra) and Quickflix (listed on the Australian Stock Exchange). Information on the Quickflix site lists a subscriber base of over 20,000. Based on this and other available estimates (BigPond at 60–70%) the Australian market would appear to be very roughly in the 50,000 subscriber range. "RussianMovies" covers dvd rental service overall Australia for russian emigrants.

[edit] New Zealand

There are three online DVD rental companies in New Zealand, all offering flat-rate packages. The three companies, all located in Auckland, are DVD Unlimited, Fatso and Movieshack. Both Movieshack and Fatso offer FastPost shipping to customers nationwide, while DVD Unlimited ceased to offer this in late 2005.

Movieshack was launched on June 28, 2004 and introduced the first large commercial online DVD rental system to New Zealand, which was followed two weeks later by the launch of Fatso.

All major companies offer a library of 14–15,000 titles, and have similar pricing packages. One report in early 2007 put the New Zealand market at around 15,000 subscribers, with DVD Unlimited at 40–50%, Fatso with 35–40% and Movieshack with the remainder.^[14]

[edit] Singapore

Gaming How Pte. Ltd. is an online video games retailer, based in Singapore, specializing in the rental of video game titles and consoles. Started in 2007, Gaming How was created by a group of gamers looking to bring convenience and cost-effectiveness to the video game market, and thus make gaming more accessible to the masses.

[edit] 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, HindiFlix, HomeView and ClixFlix in no particular order. Madhouse and Seventymm have merged and the combine is now known as Seventymm. HindiFlix is based in the United States and only serves customer within the USA.

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[[1]] from the Reliance Anil Dhirubhai Ambani (Reliance ADA) Group one of India's largest business houses.

[edit] Japan

Major online rental DVD companies are Posren and Tsutaya discas.

[edit] Africa

[edit] 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^[15] offer a similar service, but courier to the door. They are therefore more expensive, but offer quicker deliveries. BigPix^[16] launched in Durban in June 2007, also using the Post Office.

[edit] References