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 Posted: Sat Dec 18, 2004 10:39 am Post subject: Rental of DVDs by post will it death for video shop? |
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Will video shops close up because dvd rentals by post? They will probably get less customers or reduce prices, but for pay as you go dvd renters it will stay around. As you dont need to wait 1-2 days before you get to watch your dvd. You can normally get most new releases there and then, instead of waiting for them either in your rental queue or for it to be posted.
| Quote: | Rental of DVDs by post spells death for video shop
Home film choice expands as big names like Tesco and Dixons pile in to online clubs
Owen Gibson, media correspondent
Saturday December 18, 2004
The Guardian
Online DVD rental clubs are sending out one film every second to letter boxes around the UK, and threaten to put video stores out of business.
Thousands of people a week are becoming subscribers, and the phenomenon is spreading from film buffs to the mass market - with Tesco, Dixons, WH Smith, Channel 4, and Amazon launching versions.
By the end of 2005, it is estimated the number of DVDs rented through the post will overtake the total number of DVDs and videos chosen from the shelves of Blockbuster's 740 high street stores.
The companies pouring millions of pounds into grabbing a share of the nascent market believe it will also have an impact on pay TV movie services from Sky and cable operators. "We are the video on demand of today because our technology has 100% penetration - every home has a letterbox," said Mark Livingstone, chief executive of Lovefilm.com, the largest standalone service.
Video Island, which operates some of the bigger services on behalf of brands including Tesco, MSN, and an imminent launch from ITV, has sent out more than 3m DVDs to its subscribers in the year to date. It estimates that already it has a 4% share of the total rental market, equivalent to around 80 high street stores.
Its biggest rivals are Lovefilm.com, which launched in March and will have 100,000 subscribers by the end of January, and a version launched by Blockbuster as a defensive measure. Having been hurt by Netflix in the US, where the online challenger now has 2.4 million subscribers, the giant is determined not to get caught out again.
The size of the potential market is driving cut-throat competition. According to Taylor Nelson Sofres research, almost seven in 10 homes have a DVD player, and almost 10 million adults rent at least one DVD a month. A report from Screen Digest estimated the DVD rental market to be worth £376m by 2006. Released from the restrictions of shop shelves, customers are changing viewing habits, selecting widely from the 20,000-plus DVDs which a club typically offers. From the sublime, Citizen Kane, to the ridiculous, Madonna's turkey Shanghai Surprise, just about every DVD ever released is available.
According to Video Island and Lovefilm.com, only one in five of the DVDs they send out is a latest release. A larger proportion are more than three years old; good news for the Hollywood studios that have few other outlets for their back catalogue. TV series such as the West Wing and 24, as well as comedies such as The Office and Phoenix Nights, are popular, with subscribers working through a series over a number of nights.
The concept took off in the United States, where Netflix has established itself as the dominant player. Users pay a set subscription, typically £8 to £15 a month, to select online an unlimited number of DVDs and have them sent to them through the post.
Discs are returned in a supplied pre-paid envelope, whereupon the next film on a subscriber's list is dispatched. Depending on the pricing model, you can rent between one and five DVDs at a time. The attraction is that there is no time limit on sending them back.
Online retail giant Amazon recently announced a service, offering subscribers one DVD at a time for £7.99 per month. Tesco immediately hit back, lowering its cheapest offering to £7.97 per month. And early next year Easyjet's founder, Stelios Haji-Ioannou, will launch a pay-as-you-go variant, charging £1.99 per DVD under his EasyCinema brand.
According to Saul Klein, chief executive of Video Island, cheaper prices will open up a wider market to those who typically rent one or two movies a month from a store. For Tesco, expanding into everything from personal finance to digital music downloads, the online rental keeps customers coming back to its website, with the hope that they might also shop for other goods and services.
"We've found there's a large family market who don't have time to go to a video shop with two kids in the back of the car and double park. This is a new idea, but they trust us to deliver," said John Paul O'Reilly, director of the non-food division at Tesco.com. |
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