Netflix

Netflix Template:Nasdaq is the first and largest major online DVD rental service, offering flat-rate rental-by-mail to customers in the United States. By 2005, the service has attracted over three million subscribers and has a collection of over forty-five thousand titles.

Headquartered in Los Gatos, California, the company provides a monthly flat-fee service for rental of unlimited numbers of DVD movies. Customers each create an ordered list, called a rental queue, of DVDs that they would like to rent. The DVDs are delivered individually by way of the U.S. Postal Service. Subscribers keep the rented DVD as long as they like, but have a limit on the number of DVD movies they can have checked out at any one time depending on their subscription package. To rent a new DVD, customers return a currently-held one to Netflix via a prepaid mailing envelope. Netflix logs the disc as being returned and ships the next disc in the customer's rental queue. Customers could usually expect delivery of their requested DVD within 2-5 days of its shipping. If the received disc is damaged or unplayable for some reason, or if the wrong disc was received, the customer can return it for a replacement or have the next item in their rental queue sent instead. At present (2005), Netflix's most popular plan costs $17.99, which allows a subscriber to check out up to 3 DVDs at once. Other monthly programs with a variety of checkout limits range from US$9.99 to $47.99.

Contents

1 Corporate history 2 Competing services 3 Distribution centers 4 External links

Corporate history

Netflix initially offered a service similar to traditional DVD rental shops online until late 1999, fearing that flat-monthly programs might be too radical. However, after launching its subscription service, Netflix has become very successful. Key points of Netflix's success have been its ease-of-use and comprehensiveness. Unlike traditional DVD rental stores, there are no due dates, late fees, shipping or handling, or per-title rental fees. Unlike most online on-demand entertainment services, such as eMusic, the company offerings cover the vast range of DVD movies (and increasingly, television series) with more than 45,000 titles (as of 2005), including titles by major and minor studios (excluding adult movies). Particularly, Netflix has become noted for its extensive collection of documentary films, Japanese anime, and independent films — those usually hard to find in traditional rental shops. According to SEC filings, the company had attracted a million subscribers by the fourth quarter of 2002 and two million by the second quarter of 2004. [1] (http://ir.netflix.com/Edgar.cfm)

Furthermore, Netflix has developed and maintained an extensive recommendation system based on rating and reviews by customers, similar to the system at Amazon.com; the company believes that it gives it an edge in competing with newcomers like Blockbuster. James Rocchi, a film critic, also known as Mr. DVD, has contributed to reviewing movies. Moreover, the growth has been fueled by the fast spread of DVD players in households; as of 2004, nearly two-thirds of US homes have a DVD player. Netflix also operates an affiliate program which has helped it to build online sales for DVD rentals.

Netflix is an example of the odd situation about copyright issues on the Internet. While it is possible and probably more convenient to download directly movies via the network, license issues and the fear of piracy prevents such a service. While he believes it would not be an instant success because of complications in copyright handling and relatively slow adaptation of broadband Internet, Netflix CEO Reed Hastings has said that Netflix will offer limited video on demand by late 2005 with which users can download movies via the Internet and that it may even expand into the video game market.

Netflix has been one of the most successful dot-com ventures. A New York Times article from September 2002 said that, at the time, Netflix mailed about 190,000 discs per day to its 670,000 monthly subscribers. The article estimated that the company therefore distributes 1,500 terabytes of data per day, almost as much data that travels across the entire Internet in one day.

After incurring substantial losses during its first few years, Netflix posted its first profit during fiscal year 2003, earning $6.5 million profit on revenues of $272 million. Founded by Reed Hastings, Netflix was incorporated on August 29, 1997 and began operations on April 14, 1998. Netflix initiated an initial public offering (IPO) on May 29, 2002, selling 5,500,000 shares of common stock at the price of $15.00 per share. On June 14, 2002, it sold an additional 825,000 shares of common stock at the same price.

Because of Netflix's success, other companies have begun launching similar services. Wal-Mart, the world's largest retailer, started an online DVD-rental service in October 2002; however, it handed it over to Netflix in May 2005 in exchange for a promotional deal. Blockbuster, the world's largest movie rental chain, now operates a program for fixed monthly price for unlimited video rentals called MoviePass®. Netflix's success also has inspired a number of overseas imitators, such as Amango and Netleih in Germany, Zip.ca in Canada, Lovefilm [2] (http://www.lovefilm.com) in the United Kingdom, Moviemile [3] (http://www.moviemile.com/) and Videoland Online [4] (http://www.videolandonline.nl/) (formerly known as Keeno) in The Netherlands and MediaXpress [5] (http://www.mxp.tv) in Spain. Netflix had tentatively planned to expand to Canada and the United Kingdom by 2005, though Amazon's recent entry into the British market has led NetFlix to postpone international expansion.

Amid the speculation of Amazon's entrance into the US market, in June 2005, CEO Barry McCarthy noted that Amazon's current infrastracture does not fit the bussiness model of online rental service, as "[Amazon's warehouses]'re not centrally located next to post office distribution centers. They're in low cost areas which supports their core business but it doesn't leverage the existing infrastructure" [6] (http://arstechnica.com/news.ars/post/20050619-5011.html)

Competing services

The following list consists of online DVD rental services that copy the Netflix model. Monthly prices are given for plans that allow 3 DVDs checked out. While some of the competitors prices may be lower, none match the number of distribution centers Netflix has across the United States.

• Amazon / DVD Rental (UK Only) / £7.99 for 4 DVDs / (Amazon.co.uk)
• Blockbuster Video / $14.99 / (Blockbuster.com)
• Cafe DVD / $19.99 / (CafeDVD.com)
• DVD Avenue / $19.99 / (DVDavenue.com)
• Family Pass / $12.95 and up / Family-friendly entertainment, spiritual, and educational titles (FamilyPass.com (http://www.familypass.com/?c=wp))
• GameZnFlix / Game and DVD rental / $17.99 (Gameznflix.com)
• GreenCine / $21.99 / (Greencine.com)
• MovieMile / Netherlands Only / €24.95 / (MovieMile.nl)
• Moviepaks / $19.95 / (Moviepaks.com)
• Nicheflix / $24.99 and up / Specializing in hard-to-find and foreign titles
• Peerflix / Peer to peer type offline DVD distribution model, doesn't warehouse any movies 99¢ per trade.
• QwikFlix / $13.95 and up / (QuikFlix.com)
• Technical Video Rental / rents instructional videos - e.g. welding, woodworking, etc. (TechnicalVideoRental.com (http://technicalvideorental.com))
• Videoland Online (Formerly Keeno) / Netherlands Only / €24.95 / (videolandonline.nl)

Distribution centers

The following is the list of distribution centers [7] (http://www.listology.com/netflix_tracker_reports.cfm?report=centers). The code appears on a return envelope.

• City, State - Code
• Austin, Texas
• Baton Rouge, Louisiana - BR
• Bedford Park, Illinois
• Birmingham, Alabama
• Bowling Green, Kentucky
• Carol Stream, Illinois - CHI
  • PO Box 5901, Carol Stream, IL 60197-5901
• Chattanooga, Tennessee
• Cleveland, Ohio - OH1
• Columbia, South Carolina - COL
• Coppell, Texas
• Dayton, Ohio
• Daytona, Florida
• Denver, Colorado - DEN
  • PO Box 5950, Denver, CO 80217-5950
• Duluth, Georgia - DUL
• Flushing, New York - FLU
  • PO Box 548008, Flushing, NY 11354-8008
• Fresno, California
• Ft. Lauderdale, Florida - FTL
• Gaithersburg, Maryland - GAT
• Greensboro, North Carolina - GB
• Hartford, Connecticut
• Harrisburg, Pennsylvania
  • PO Box 69050, Harrisburg, PA 17106-9050
• Honolulu, Hawaii
• Houston, Texas - HOU
• Indianapolis, Indiana
• Kansas City, Missouri - KC
• Lakeland/Tampa, Florida - LAKE
• Lansing, Michigan - LAN
• Las Vegas, Nevada
• Louisville, Kentucky - LOU
• Manchester, New Hampshire
• Minneapolis, Minnesota - MN
  • PO Box 9473, Minneapolis, MN 55440-8543
• New Brunswick, New Jersey - NWK
• Newark, New Jersey - NWK
• Orlando, Florida
• Paducah, Kentucky
• Phoenix, Arizona - PHX
• Pittsburgh, Pennsylvania - PITT
• Richmond, Virginia
• Rochester, New York - NY1
• Salem, Oregon - OR1
• San Francisco, California
• San Jose, California - SJ
  • PO Box 49021, San Jose, CA 95161-9959
• Santa Ana, California - SA
  • PO Box 25010, Santa Ana, CA 92799-5010
• Southeastern/Philadelphia, Pennsylvania - PHIL
  • PO Box 1104, Southeastern, PA 19398-1104
• St. Louis, Missouri - STL
• Stamford, Connecticut
• Tacoma, Washington - TAC
  • PO Box 11645, Tacoma, WA 98411-6645
• Tampa, Florida - TPA
• West Sacramento, California
• Worcester, Massachusetts - WOR
• Portland, Maine
  • PO Box 9793 Portland, ME 04104

External links

• "The Netflix Way" (http://www.salon.com/tech/feature/2002/06/06/netflix/), Salon.com, By Damien Cave, June 6, 2002
• "The Netflix Effect" (http://www.wired.com/wired/archive/10.12/netflix.html), Wired Magazine, By Jeffrey M. O'Brien, December 2002
• "The Packaging of Video on Demand" (http://www.nytimes.com/ref/open/innovations/23NECO-OPEN.html), The New York Times, by Peter Wayner, September 23, 2002
• Renting from a DVD Rental Club (http://movierentals.articleinsider.com/61275_dvd_rental_club.html)
• Hacking NetFlix (http://www.hackingnetflix.com/) - a blog
• Netflix Fan (http://netflixfan.blogspot.com/) - a blog
• Netflix Fee Calculator (http://netflix.frogcircus.org/)
• Netflix Queue Manager bookmarklet (http://badsegue.org/archives/category/netflix/)
• My Opinion of Netflix (http://www.manuelsweb.com/netflix.htm)
• NetflixBuddy.com (http://netflixBuddy.com/) - a fan site for underground users
• Netflix Takes Over Wal-Mart DVD Rentals (http://biz.yahoo.com/ap/050519/netflix_wal_mart.html?.v=5)