Movie fans can spend a lot of time waiting in lines – waiting in line to buy tickets at the theater, waiting in line to rent a movie at Blockbuster, waiting in line to purchase a movie at Best Buy.
But with the advent of the internet, fans will no longer have to endure long lines, not to mention late fees on rentals.
Netflix, a growing California-based company, lends videos over the internet to subscribers for approximately $20 a month. Unlike video stores, Netflix charges no late fees and has no due dates. Customers can keep up to three videos at a time, and once they return a video, they can rent another. Shipping is free, and videos are usually delivered in a day.
Launched in 1999, the company started when Reed Hastings, its CEO, had a late fee on ‘Apollo 13’ and decided to launch an internet company that would rent videos without charging late fees, said Lynn Brinton, a Netflix spokeswoman.
Since then, the company has attracted about one million customers and several million dollars in profit.
Brinton said the popularity of products such as TiVo, which records television shows, and services such as Netflix prove that people are ‘not tuning into appointment TV.’
‘We tapped into this trend where [people] are no longer tolerating restrictions on consuming their entertainment,’ she said.
Although Netflix has caught on quickly with computer-savvy consumers, it will likely be a while before the company catches up with rental titans such as Blockbuster.
Randy Hargrove, a spokesman for Blockbuster, pointed out that while Netflix has about one million customers, Blockbuster has a total of 48 million accounts, with an average of two people per account, totaling about 100 million users.
He added that people last year spent a total of $200 million renting movies online, while spending $8 billion renting movies from traditional video stores.
‘Our thoughts are that online movie subscription is a niche market,’ he said. ‘We think that the online market may have room to grow to two to three million [customers] but won’t be overtaking the mainstream renting business.’
Netflix’s future success will be limited because video renting is an ‘impulse activity,’ Hargrove said, which conflicts with the habits of online shoppers.
‘A storm can be coming in, and they decide to get a video,’ he said. ‘People won’t be wanting to wait by the mailbox for their video.’
Even though college students spend an immense amount of time online, Netflix has not yet tapped into the mainstream markets for college-age consumers either.
According to Brinton, only 7 percent of Netflix subscribers are between the ages of 18 and 24. The average subscriber is about 40, she said.
Still, she believes that as the company becomes ‘increasingly mainstream,’ consumers in this coveted demographic will respond to Netflix in higher numbers.
Ethan White, a College of Communication junior and a former Netflix subscriber, said he was satisfied with the service but cancelled it because he no longer had the time to watch movies.
‘When I first started, they had a good selection,’ he said. ‘They had a great deal and you could get as many movies as you wanted. But now they’ve changed it so that they won’t send videos until they get [previously rented videos] back from you.’
Still, White said he believes Netflix can be a good deal for some people.
‘I didn’t have time anymore,’ he said. ‘It’s great if you watch a lot of movies. If you watch four to five movies [a month], then you broke even with [the cost of videos from] Blockbuster,’ he said.
To prevent the loss of bargain-hunting customers, Blockbuster launched a program similar to Netflix in the summer of 2002. Called the Freedom Pass, the rental service allows customers to rent as many movies as they want, without late fees or due dates, Hargrove said. Like Netflix, customers can only take out three movies at a time, and membership costs $25 a month.
‘We think the real win is a seamless, in-store and online customer service, something that would allow customers to rent both online and through the store,’ Hargrove said.