How do you get your movie rentals?

By Ron Miller

Print Story | Email Story
Add to My Digital Landing

Related Articles

• Understanding HDTV Features and Specifications
• Shopping for an HDTV: The Basics
• Give New Life to Old Movies with HD Upconverters
• Buying an HDTV: Cut through the confusion
• DTV Delay Act pushes transition to June 12

It's Friday night and you want to rent a movie and watch it with your family. Seems simple enough, but suddenly you have a cavalcade of choices including:

• Brick and Mortar Rental Stores: You go to a store and rent a physical copy.
• Delivery Service: You sign up for a subscription service such as Netflix, create a wish list of movies you want to see, and receive DVDs by mail.
• Video On Demand: You select a movie to watch from a video-on-demand menu on your television and pay a fee that gets added to your cable bill.
• Downloads: You go online, pay a fee and download a movie.

So many choices just to decide how you will get your movie, yet each has its pros and cons. Deciding which is the best choice is not always easy. Welcome to the world of 21st century entertainment.

Driving to the Store: The Old Fashioned Way

This method originated in the 1980s with video rental stores and has evolved to DVD rentals. With a store, you get in the car (or walk if you are in the city) and go to a store such as Blockbuster. You can wander the aisles and find a DVD that suits your fancy, pay a rental fee and take it home. In most cases, you need to have it back in a certain number of days or you pay a late fee.

Todd Chanko, an analyst at Jupiter Research says what the video store offers you is the prospect of instant gratification. "If you walk into a home video store and there is a specific title you want to rent, and it's there, you're golden," Chanko says, "but even if it's not in stock, you still have the prospect of serendipity and another kind of gratification." He says, in spite of the fact it involves leaving the house and driving to the store, and could involve late fees, it is still extremely popular.

In fact, according to a Jupiter Research report, Online Video Rental, Strategies for Retailers to Compete, which Chanko helped author, Jupiter expects the total video rental market measuring both stores and delivery service (not VOD or Internet download services), to be around $8B through 2010. Of this, he says, the vast majority of the money is going to brick and mortar retailers.

Getting Your DVDs in the Mail

Companies like Netflix started with the idea that consumers don't want to leave the house to get a movie and they don’t want to pay late fees. Instead, you sign up for a subscription, agreeing to get a certain number of DVDs at a time, and setting up a wish list of movie titles you want. The DVDs arrive by mail and you can keep them as long as you like. When you mail back the DVDs in the postage-free mailers, Netflix sends you the next movies on your wish list.

Chanko says the main difference for the consumer when using Netflix instead of a video store is that you lose the spontaneity of the store experience. "Netflix is a much more planned exercise," he says. "There is little room for serendipity and certainly no room for impulse whatsoever. The impulse is at the beginning of the process when you say 'OK, I'm going to create this wish list.' Of course, it's not fixed in time. You can certainly continue to manage and update your wish list, but it’s not exactly comparable to an in-store experience," he says.

Chanko says that while Netflix was certainly a wake-up call to Blockbuster (which now offers its own similar service), Netflix has been more of an irritant to the home DVD rental store market than having a major impact. According to Jupiter, in fact, Netflix accounts for about 12.5 percent of the total home video rental market. He says while this is fairly significant in terms of revenue, earning $1.2B in revenue in 2006, it is still just a fraction of the total $8B market.

Video on Demand (VOD)

With VOD, you turn on your TV, go to a station with a menu of on-demand choices, which includes pay movies--usually popular recent releases you would find at the DVD store. The movie prices vary, but generally run around $3.99, which buys the show for 24 hours, and of course there are never late fees because your right to watch the movie simply expires. You can view the movie as often as you like during that time, and you can pause, fast-forward or rewind using the cable company’s set-top box remote, so it offers a similar experience to a DVD. On-demand services also offer free movies, access to cable subscriber movie channel content such as HBO or Cinemax (so long as you have the service in your subscription package) and other free programming such as music videos or shows that appear on the cable system, enabling you to watch this content on your own schedule.

Chanko defines video on demand as, "a two-way relationship between subscriber's set-top box and the cable company's [or Verizon FiOS'] head-end servers where you are ordering content directly from the server. None of the information is stored locally," he says. What's more, it is only available to digital cable subscribers. It's not available in analog, and despite what Dish and DirecTV may claim, he says, they do not offer true VOD. Instead, the satellite providers push content, which is stored locally on the subscriber's DVR (digital video recorder).

Jupiter has identified 34.7 million of the 115M US TV households as digital cable subscribers. Chanko said that in spite of the convenience of on-demand programming, only 8.8 percent of online subscribers surveyed indicated they had paid to see a movie in this fashion.

Online Rental or Purchase

The final choice for movie renters is online using a service such as CinemaNow. For $3.99, you purchase the right to watch a movie on a single computer for 24 hours. You cannot burn the movie to DVD, nor can you copy it to a portable device or transfer it to another computer. With this method the movie streams to your PC where you can watch it. The size of the video window depends on the quality of the download you choose. You can also purchase the right to burn the DVD for a substantially higher fee ($19.95 for recent releases). As with VOD, you don't have to leave the house, nor do you risk any late fees, but you must watch the show on the computer where you download it. Chanko says this type of rental market is around 10 percent of the market, including both video streaming and downloads.

So the next time you want to rent a movie, once you get the family to agree on what you are going to watch, then you need to decide how you are going to rent the movie. If you are like most people, you will probably still get in the car and drive to the rental store, but know that you have alternatives. You just have to decide which one works best for you.