DVD-by-mail

DVD-by-mail consist of renting DVDs, Blu-rays, video games and VCDs, among other film media internet, for delivery by mail. Generally, all interaction between the renter and the rental company takes place through the company's website.

Background

Most companies operate on the following model:

• The customer joins the rental service and creates a list of titles they wish to watch, which are ranked by priority.
• 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 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.

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. Netflix began an online streaming program allowing for the online viewing of select movies and TV shows.

"Throttling"

Given sufficiently fast mail delivery times, customers on "Unlimited" plans who return 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 company 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 significant publicity with regard to Netflix (which refers to the practice as a "fairness algorithm").^[1] In this case, high-volume customers may experience a greater likelihood of (slower) shipments from alternative warehouses, when the nearest shipment center does not have the requested disc. Also, if there is a high demand for a particular disc, 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 list.^[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".

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.^[3] 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.^[4] "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."^[5] concerning their Selection and Allocation of Product, which could be read as contradicting this announcement.

Marketplace summaries

The following is a summary of the main English-speaking markets.

North and South America

United States

Netflix envelope and inner sleeve with DVD

Blockbuster envelope

Netflix ended 2008 with 9.39 million customers.^[6] 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.^[7] 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.^[8]

There are a number of smaller companies, some of which target specific niches: eHit,^[9] 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.

Canada

Estimates put the number of Canadian subscribers at 70–80,000, with Zip.ca having had around 50,000 before ceasing operations. Other competitors include Kaku.ca and DVDlink.ca. Cinemail.ca announced it would cease operations at the end of June 2013.

Mexico

Blockbuster Online started DVD Rentals in Mexico during 2007, after the chain acquired a local startup called MovieNet.

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.^[10] 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 the US, as a single shipping facility can serve the entire country.

In April 2006, LoveFilm merged with its major rival Video Island, which had operated ScreenSelect and other brands,^[11] 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.^[12][13][14]

Asia/Oceania

Australia

There are several providers in Australia, the most prominent being Quickflix (listed on the Australian Stock Exchange) and BigPond Movies. BigPond Movies announced in June 2011 that they will be pulling out of the DVD-by-mail market at the end of September 2011 and are, instead, offering subscribers the option of downloading movies directly via their proprietary T-box device.

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 - the date the site was registered.

Cinesprite, Seventymm and Bigflix have closed their operations. Clixflix (the oldest) is still in operation in Mumbai.

Japan

Major online rental Blu-ray Disc and DVD companies are Rakuten Rental, Tsutaya Discas, and Posren.

See also

• Automated teller machine
• Blu-ray Disc
• DVD
• HD DVD
• Interactive kiosk
• VCD
• VHS

References

1. Archived April 3, 2007, at the Wayback Machine.
2. What is "throttling" and does Netflix "throttle" its members?, Netflix, September 10, 2007, Retrieved 2007-09-12.
3. "Advertising Standards Authority adjudication upholding a complaint against LOVEFiLM". Asa.org.uk. August 9, 2006. Archived from the original on September 28, 2007.
4. "BLOCKBUSTER Online Doesn't Throttle Customers!". Blockbuster Inc. 2007-03-02. Archived from the original on April 23, 2007. Retrieved 2007-03-28.
5. "Blockbuster Online - Terms and Conditions". Blockbuster Online. 2007-11-03. Retrieved 2007-03-28.
6. "Netflix 2008 Annual Report". Netflix. 2009-05-28. Retrieved 2009-08-06.
7. "Blockbuster reports First Quarter 2007 results"
8. "Walmart.com and Netflix Announce New Promotional Agreement". Netflix. 2005-05-19. Retrieved 2007-03-28.
9. "eHit.com - Rent Chinese and English Dvds Online. Watch it Now". Archived from the original on 27 July 2007.
10. "Bem vindo a Blockbuster". Máquina de Cinema Blockbuster.
11. "LoveFilm and Video Island merge to create Europe's leading online home entertainment group". LoveFilm. 2006-04-06. Retrieved 2007-03-28.
12. "LoveFilm to Acquire Amazon's European DVD Rental Business - Amazon to become largest shareholder of LoveFilm". Lovefilm.co.uk. 2010-05-24. Retrieved 2013-03-24.
13. "LoveFilm website". Lovefilm.com. 2010-05-24. Retrieved 2013-03-24.
14. Williams, Christopher (2008-02-05). "Amazon buys into Lovefilm". Theregister.co.uk. Retrieved 2013-03-24.