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Information about Netflix

Netflix is one of an increasing number of online DVD rental services.
Located in Los Gatos, California, the company provides a monthly flat-fee
service where you can rent unlimited numbers of DVD discs with certain
numbers of currently checked out titles. Unlike traditional DVD rental shops
such as Blockbuster Video, there are no due dates, late fees, shipping or
handling, or per-title rental fees, so you can keep DVD discs as long as you
want. To rent a new DVD, one would return currently-held discs back to
Netflix. At present (2003), Netflix offers monthly programs ranging from $14
to $40 with different checkout limits.

Netflix is one of few successful dot-com ventures actually making a profit.
It posted its first ever profit of $3.31 million in the second quarter of
2003 on revenues of $63.2 million. Started by Reed Hastings, initially
Netflix had been offering a similar service to traditional DVD rental shops
on-line until late 1999, fearing that flat-monthly programs might be too
radical. However, after launching its subscription service, Netflix became
very successful.

Because of its success, other companies have begun looking into the online
DVD rental market. Wal-Mart, the world's largest retailer, started an online
DVD-rental service in October 2002. Blockbuster, the world's largest video
store chain, began test-marketing a fixed monthly price for unlimited video
rentals.

The key point of the company's success is its ease of use and
comprehensiveness. Check-out at Netflix is not done in the traditional
manner; discs are not due back within a few days after selection. Instead, a
customer only needs to select a list of DVD discs that he or she would like
to rent. Unlike most online on-demand entertainment services, such as
EMusic, the company offerings covers the vast range of DVD discs with over
13,500 titles (as of 2003), including titles by major studios.

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. However, the bandwidth costs would be enormous.

A New York Times article in September 2002 said that Netflix mails 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.

Netflix operates an affiliate program which has helped it to build online
sales for DVD rentals online.

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