Online Video Rental Competition

Online video rental sales are booming, and new companies are starting to make waves for the Big Two. The Internet movie pioneer, Netflix.com, anticipates revenue of over 900 million dollars from online video rental sales in 2006. With over 220 million dollars generated in the first quarter, they may pull it off. In spite of a little bad press around the supposed practice of throttling (deliberately shipping frequent renter movies at a slower pace) they remain the undisputed champion of online video rental market share. Blockbuster.com, the other big fish, is refining their system to compete with Netflix.com by matching prices and offering free in-store rentals to online subscribers. These video rental giants are clobbering small companies. How, one has to ask, do the guppies intend to stay afloat with the multi-billion dollar competitors gobbling up online video rental market share like sharks on wounded surfers?

Everybody has online video rental plans around $20.

The most popular online video rental plan, for both Blockbuster.com and Netflix.com, allows renters to view three videos at a time, with an unlimited number of rentals per month. In May of 2006, both companies charged $17.99 for this service. Both companies also offered a two week free trial. Blockbuster.com offered 1 free in-store coupon per week with this service and advertised over 50,000 titles to choose from for online video rental. Netflix.com offered 60,000 titles. On the surface, smaller competitors are offering plans very similar to these. Intelliflix.com ($16.95), Qwikfliks.com (19.49), cafedvd.com (19.95), and Greencine.com (21.95) all offer 3 video plans priced within a few dollars of the Big Two. So what’s keeping the little guys afloat? The answer is Threefold: delivery speed, nakedness, and mixed-media plans.

Delivery speed: the location, location, location, of online video rental.

This is the most touted reason many small companies are gaining ground. Qwikfliks.com, for example, offers a “Rapid Return” service. When finished viewing a movie, renters logon to the website and indicate they are ready for a new title; before they’ve even plopped the current movie in the mail slot. This cuts the time between shipments in half. Blockbuster counters this shipping lag by offering in-store rentals; an apologetic approach that appears to be working. Netflix.com has yet to come up with a solution to shipping lag, but will undoubtedly need to address the issue as smaller companies become more efficient.

An emerging trend (Greencine.com) to keep an eye on is video on demand. This online video rental technology, refined by the Internet porn industry, allows renters to download movies for a one time fee. Increased Internet connection efficiency and the reduced price of high speed access may bring this method of movie viewing to the mainstream online video rental market in a big way.

Adult movies, Mature movies, Porn, Skin Flicks, You get the idea…

The online porn industry is massive, but determining just how massive is a difficult task. All we can say for certain is it is a multi-billion dollar industry; one that smaller Internet video rental companies are cashing in on. The online manifestation of dealing in taboo material has the same effect as it did for the corner video store in that bygone era when viewing porn involved dressing indiscreetly and pulling a hood tight around your face. Intelliflix.com, Qwikfliks.com, and Greencine.com all offer adult collections. Netflix.com stocks unrated and NC-17 titles, but not explicitly adult material. Blockbuster.com, however, stocks only titles rated R or milder. This cash crop, left unharvested by the Big Two, is bringing in loyal dollars to those willing to work the field.

Multi-Media Rentals: combining movies, adult movies, and video games

In addition to offering Adult titles, some online video rental companies (Intelliflix.com) allow renters to receive these titles at the same price as mainstream titles. On top of that, the monthly fee also includes video game rentals. What does this mean for blockbuster and Netflix.com? It means they’ve captured the family oriented baby boomer dollar that has long preoccupied the dreams of American retailers; but they are going to lose the business of the customer who wants to watch a movie with his girlfriend on Friday night, gun down aliens in his favorite video game on Saturday morning, and then throw on something a little trashy for the big poker game with the guys on Saturday night. Said customer also doesn’t want to juggle three online accounts, or have something obscene listed on his credit card bill while its laying on the coffee table, next to the cup of coffee his visiting grandmother is drinking. Sorry grandma…It’s my…ahem…my roommate was short on cash…

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