Online video rental services allow a person to rent DVDs, Blu-ray Discs, HD DVDs and VCDs, among other film media online; for delivery by mail. Generally, all interaction between the renter and the rental company takes place through the company's website.
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.
Most companies will let customers keep the films for as long as they want; customers are, however, limited to a set number of discs out at any one time. Commonly, once a disc is returned, another is sent out. Some companies or plans may have a limit on the total number of movies rented in a month. Memberships are usually billed monthly, and includes postage both ways.
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:
"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, 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.
Red Box 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.
Canada
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.
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
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.
Colombia
First video rental service in Colombia "Cineadomicilio" offer rental service since 2007 and keep increasing his customers database and associated stores in country.
Argentina
The leading company in this market is Musimundo Videoclub.
Jamaica
Even the Caribbean has seen the emergence of online DVD rental services with "e-Videos" targeting the major city of Kingston. DVDs are delivered to customers and drop boxes are provided to facilitate the returns.
Europe
LOVEFiLM International Ltd is Europe's leading online DVD rental subscription service with just over one million members and operates in the UK, Sweden, Norway, Denmark and Germany.
United Kingdom
Given the relatively small geographical area and high population density of the UK
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