Why Is Everyone Renting DVD�s?

By Robert Barnard

Everyone�s getting into the act - Blockbuster, Amazon, Intelliflix - not to mention the already established markets such as Netflix. What am I talking about? DVD rentals - either from online sources or the �brick and mortar� businesses in your neighborhood - these rentals rank among the fastest-growing segment of the DVD marketplace. Many times you might even walk into your local convenience store and find DVD�s for rent.

Why such an explosion in this market segment? Because the upsides are fast profits and low inventory costs, while the downsides are minimal - mostly non-return of inventory - and merchants can charge their customers for that. Estimates say that the DVD rental market will be worth something in the neighborhood of $24 billion by the end of 2006 - for a relatively inexpensive investment and simple rental system, it�s no wonder that retailers want a piece of this particular pie.

With such a hot marketplace, prices and incentives change with the speed of light, but here�s essentially how it works - you can either sign up as a subscriber or pay on a per-rental basis, meaning you pay for each movie as you rent it. As I�m writing this, Intelliflix offers the most competitive subscription plan - for 3-DVD�s at a time, you get unlimited monthly rentals, free shipping back and forth, no late fees and you can cancel at any time - for $16.95 a month. By comparison, Blockbuster offers a similar package at $17.99, plus they sweeten the deal by giving you up to 4 coupons you can use in one of their 4500 �brick and mortar� locations for a free movie rental.

Online DVD rentals have the advantage of saving time for customers, not to mention saving on late fees when you can�t quite get back to the rental store within the rental period. The time-saving factor alone is likely responsible for the rapid growth of this market segment - with overbooked schedules in every household a service that offers free shipping both coming and going is a big attraction.

Of course there are also the standard video-rental stores, most often a local business in your neighborhood that has opened a little additional revenue stream to their other operations. The downside of these places are that they typically charge late fees for late returns, with a specific term of rental, such a 3 days or 5 days, plus you have to physically make the trip to pick up and return the movies. Convenience isn�t the watchword here, unless you happen to stop in at your local convenience store every day for some refreshments.

The advantage to DVD rentals, of course, is that you get a chance to preview a movie before you decide to buy it. Just as with the old VHS tapes, you can watch a DVD movie you�re interested in, and if you like what you see it�s a simple step to purchase that DVD and add it to your collection.

Another option that�s also rapidly expanding in market share are companies that allow you to download movies directly onto your home computer. These companies offer pay-per-view service for rentals, purchases and download-to-burn DVD�s for your personal use. Rental prices typically range from $,99 to about $4.99, while purchases usually fall into the $8.99 to $25.99 range, depending on title. Generally speaking, rentals can be stored on your computer for up to 30 days, but must be viewed within 24 hours of initial playing. The advantage to this type of service is that once you�ve viewed the movie, you can then burn a copy (after you�ve arranged for the purchase) on your home computer and add it to your collection.

Robert Barnard is the Co-Founder & CTO of MX123.com. He�s been involved with computers since the early 80�s. He holds / has held many international industry certifications in the computer industry from CompTIA A+ to Microsoft Certified Professional & Microsoft Certified Systems Engineer.

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