Netflix DVD rental service is an internet-based company that rents DVD to customers via their website and the US Postal Service. In fact, it is the largest such company currently in existence. With a net worth of approximately $650 million, it is in a strong position to dominate the online rental industry and make obsolete it’s traditional rental counterparts. Netflix DVD rentals are fast, easy and a good value for anyone who frequents a local video store. For this reason, more and more people are turning to Netflix for their rental needs.
Netflix’s DVD rental business is booming. Although last year was the first year Netflix turned a profit, things are shaping up well for that profit margin to be even greater this year. But, to borrow the colloquialism, they are not out of the woods yet. With competition from Blockbuster and Wal-Mart, Netflix has had to make sure it offers customers a reason to chose them over their competitors. And thus far they have. With more than sixty warehouses across the country providing next day delivery to most major parts of the country and two day to the rest and a selection analogous to the Library of Congress, Blockbuster and Wal-Mart have their work cut out for them.
Just because Blockbuster and Wal-Mart aren’t serious threats doesn’t mean Netflix doesn’t have anything to worry about. Amazon.com will very likely become the next big player in the online rental business and Yahoo may not be far behind. Both already have large consumer bases and money to burn—to the tune of $3.1 million in Yahoo’s case, which makes it a very real possibility that they may attempt to buy Netflix outright. Amazon, not having the capital that Yahoo does, is more likely to start their own rental business with the customers they already have. Reed Hastings, the Chair, President, and CEO of Netflix, thinks Amazon is already gearing up for their entry into the market, but they have declined to respond when asked about it.
To combat this threat, Netflix is stepping up its effort to acquire new customers. Recently, Netflix was reported to have spent $36.06, just over twice the monthly fee, per customer to acquire the number it has now. Hastings is hoping to have an enrollment of 25 million in the next few years in order to appeal to big Hollywood studios. He says that he thinks downloadable movies are the direction rentals are heading and he wants to corner the market when it happens. If things go well, Netflix could indeed be the future of movie rentals.