Online DVD rentals: learning from Netflix?

With both Seventymm and Bigflix, I have come close to signing up – but never signed on. The barrier was not the registration fee but a niggling doubt whether this kind of service is really useful for me. I am quite Ok buying the DVDs I desperately want or renting them from a store. When renting, being rushed to see a movie is an irritant. The online rentals promise to remove this worry but I am still not convinced. They have built huge businesses in the US. Netflix, which took on Blockbuster, is one such success. Netflix claims a subscriber base of 8.2 million and an inventory of more than 100,000 titles. According to the Netflix website, its members say they rent twice as many movies per month than they did prior to joining the service. Some of the reasons for Netflix’s success include: lack of late fees, unique distribution system, huge inventory unmatched, creation of a user community and personalization. Based on the movies you have ordered previously, movie titles are recommended for you, using other user ratings. Even its website is noted for its simplicity and was nominated for the Webby Awards in 2003 & 2004. Their method of delivery – the red envelope has become iconic in its own way. What seems like a basic service has actually been thought through to work virtually error free.

The challenges faced by Indian DVD rental services are not about coming up technology like that of Netflix – that’s the easy part. They could even delight consumers with their customer service. After all, we have our SMS services for reminders & orders. The personal pick up service may work in most cities. Our brands need not rely on couriers & postal services for delivery & pick up. The challenges are in the area of consumer mindset and competition.

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• Who is the target audience?: the up-market, English movie aficionados are small in number. While they may be potentials, will the services offer the titles relevant to them? They are not likely to be fans of the popular genres like action. If they don’t find the titles they want online, they are unlikely to be regular users of such services. If the potential is the rung below who are not averse to some Hindi or regional movies, are the comfortable with online transactions? Housewives are ideal consumers but they have their fare on TV and DTH. If its the ‘on the go’ generation, that’s precisely the problem – they are on the go. They would prefer to hang out in malls or party with friends. Would a quiet family evening watching Titanic on a rented DVD get to be their habit?
• Competition from low-price DVDs, piracy and DTH: the unit price of some Hindi & regional titles are dropping. The corner store pirate is still around. And DTH offers some new movies to watch on-demand. These could be barriers for signing up with these rental services.