DVD Rental – Netflix Vs Blockbuster Videos

Antonio Fox asked:




If you are still renting movies at your local video store or Redbox, you might be selling yourself short. Read on, for the “state of the art” in movie rentals.

Blockbuster’s Success

For many years, big chain stores like Blockbuster and Hollywood Video did a great job at providing video rentals. Current releases, reasonable prices, and cheap previewed DVDs were the secrets to their success. The formula served them well. Unfortunately, technology changed along with customer needs.

Enter Netflix

It took a little upstart company called Netflix to show the big boys what the next step was. Netflix took one of the oldest forms of media conveyance–the US Postal Service–and coupled it with the newest form–the Internet. It used this odd pairing of resources to change how people view DVDs.

Toss the Cases

People have always loved DVD cases for their brazen abstracts and cool artwork, making their periodic visits to the local rental store an event. You picked up a DVD case, admired the graphics, read the synopsis, and then moved on to the next one.

When you finally settled on a movie, you took the case to the counter to be filled with the actual DVD disk (some stores kept the disks in their cases at the risk of theft).

How did Netflix respond to this? It tossed out the cases and threw the DVDs into little red envelopes! This allowed the DVDs to be shipped via media mail for pennies rather than dollars. The result was that Netflix could undercut the brick and mortar rental houses because it had no stores and minuscule shipping costs.

When you desired a movie, you went to the Netflix website and read the synopsis. After picking a movie, you ordered it right there with the click of a button. Who needed those dopey cases anyway? You’re not buying the movie, you’re renting it.

Skeptics

When Netflix started this system in 1999, it sounded a bit complicated, but as people became accustomed to the Internet, it became easy as pie. Certainly easier than slogging to your local video store.

Other skeptics viewed it as a bit of a joke–the idea of popping the DVD into an envelope and mailing it! Wouldn’t the disks break? No, the disks didn’t break and the little joke spread via word of mouth. Eventually it caught on in a big way to the point that Netflix became the real blockbuster.

Innovations

Netflix fortified its success with more innovations: rental queues, no late penalties, strategically located distribution centers, and a graduated price structure that allowed one or more movies to be rented at the same time.

The queue is essentially a “wish list.” As one movie is delivered back to Netflix, the next one on the list is shipped out to the customer. It keeps the Netflix machine moving and the customer with a constant supply of movies. Each family member can have a queue of their own.

Late penalties were the bane of movie rentals. Some stores charged up to $5 per day for new releases. Many customers migrated away from brick and mortar stores to Netflix on the promise of no late penalties alone.

As Netflix grew, it set up distribution centers at strategic locations around the country. DVD turnover became as short as two days. Netflix was able to fine tune this system by regularly requesting feedback from its customers, a technique the company still uses.

The Competition

This quiet revolution in movie rentals was the death knell for most local rental shops and a few big ones as well. Blockbuster and Hollywood Video saw the light in time, barely. They made some changes, the main ones being lower prices and no late penalties.

Blockbuster even went a step further. It modified its business model to include a Netflix-like mail order system. Netflix customers are extremely loyal, so whether Blockbuster implemented this service in time has yet to be seen.

Online Viewing

Netflix didn’t bask in its success, and it certainly wasn’t going to be caught with its pants down like the rental giants before it. The company’s research pointed to the next big innovation in movie rental: online viewing. In true Netflix style, it implemented such a service.

The initial roll-out featured an online movie viewer that only played on Windows based computers. When the service proved successful, it was extended to include Apple computers with Intel processors.

Initially, the quality of the viewer left something to be desired. The image was noisy with lots of pixelation. Again, using customer feedback, Netflix fine tuned the system. Now, with a high-speed Internet connection, Netflix online viewing is like watching HD television. Not bad, not bad at all.

The Latest

Netflix’s latest service allows you to watch movie rentals directly on your TV or home theater projector (if you’re not familiar with the latest in home theaters, see the link below). The process is simple. Hook up your Netflix ready device to the Internet via an Ethernet cable. After you pick a movie on the Netflix website, you can have it sent directly to the device.

Conclusion

So that’s the state of the art in movie rentals. Pretty amazing, huh? If you are still driving back and forth to rent your movies, you might want to give this brave new world a look, especially when those gas prices start inching up again. Until then, happy movie viewing!