Netflix

Netflix is the first and largest major online DVD rental service, offering flat rate rental-by-mail to customers in the United States. By 2005, the service has attracted over three million subscribers, and the company expects the number to reach four million by the end of the year. It has amassed a collection of over 50,000 titles.

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Headquartered in Los Gatos, California, the company provides a monthly flat-fee service for rental of supposedly unlimited numbers of DVD movies. Customers each create an ordered list, called a rental queue, of DVDs that they would like to rent. The DVDs are delivered individually by way of the U.S. Postal Service, from an array of regional warehouses (currently 35 or more). Subscribers keep the rented DVD as long as they like, but have a limit on the number of DVD movies they can have checked out at any one time depending on their subscription package. To rent a new DVD, customers return a currently-held one to Netflix via a prepaid mailing envelope. Netflix logs the disc as being returned and ships another disc in the customer's rental queue. Delivery time is dependent on the postal service and the Netflix policy critics label "throttling," which delays shipments to its most frequent users. This policy is outlined in Netflix's terms of use http://www.netflix.com/TermsOfUse#how. Netflix claims to serve 90% of its customers with "generally" one business day service. If the received disc is damaged or unplayable for some reason, or if the wrong disc was received, the customer can return it for a replacement or have the next item in their rental queue sent instead. At present (2005), Netflix's most popular plan costs $17.99, which allows a subscriber to check out up to 3 DVDs at once. Other monthly programs with a variety of checkout limits range from US$9.99 to $47.99.

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Netflix began in 1998http://www.dvdfile.com/news/special_report/features/timeline/timeline.htm with an online version of a more traditional pay-per-rental model ($4 per rental plus $2 in postage; late fees applied), and did not introduce the monthly subscription concept until late 1999http://www.wired.com/wired/archive/10.12/netflix.html?pg=2. Various other companies have followed in the US market, but none of the purely online companies appear to approach Netflix in terms of size or revenues. Walmart began an online rental service in 2002, but left the market in May 2005 and now has a cross-promotional arrangement with Netflix. The rental-store giant Blockbuster entered the US online market in August 2004, leading to a price war - Netflix had just raised their flagship 3-disc plan from $19.95 to $21.99 before Blockbuster's launch, but by October had reduced this to $17.99. Blockbuster responded with rates as low as $14.99 for a time, but by August 2005 both companies settled at the (identical) current rates. Blockbuster's subscriber base after one year was roughly a third of Netflix's size; Netflix has also cited Amazon as a potential competitor. Netflix had preliminary plans to expand to Canada and the UK in 2005, but these appear to have been postponed or cancelled as Netflix concentrates on the US markethttp://www.usatoday.com/money/media/2004-10-17-netflix-dvd-war_x.htm.

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Online DVD rental: Online DVD rentals allow a person to rent DVDs by mail. Generally, all interaction between the renter and the rental company takes place through the company's website....

Flat rate: A flat rate (sometimes "linear rate") refers to a pricing structure that charges a single fixed fee for a service, regardless of usage....

United States: :For other uses, see US (disambiguation), USA (disambiguation), and United States (disambiguation)....