A White Paper

On

Online Video Rental

Submitted by :-
Group 21

Comprising of

Aditya Kulkarni (09BM8004)

Archit Mehrotra (09BM8012)

Col Gurtej Gill (09BM8020)

Mohammad Mudasser (09BM8024)

Online video rental

Surely you can buy a DVD for 500 bucks or even less!! But roughly for the same
amount same month, you can turn your living room into a local multiplex.
Subscription rental sites offer thousands of titles, charge no late fees, and let you
watch as many movies as you can each month. Since the DVDs are sent through
mail, you’re at the mercy of the postal service, wait times can vary, depending
on where you live and which site you use.

The online video rental market is popular as it has got several advantages. The
obvious being the convenience and hassle-free mode of ordering the DVD online.
You get an almost unmatched variety of titles and have a long list to choose
from. Generally, the price of these rentals is cheaper, though it depends on the
kind of plan you take. There also is not a concept per se of the late fees which is
prevalent in the physical rental service.

How it works:-

With the ever increasing penetration of the internet and consumer spending over
the internet following close behind, it doesn't take a lot to imagine that Online
DVD Rental may well overtake the traditional high street alternative. There are a
number of big brands in the Online DVD rental market and despite the number of
companies providing these services; they all follow a similar four step process:

 Sign-up & Select. This involves selecting your favourite DVD/VCD/Bluray

rental service provider from the ones available. After choosing your
favourite, you decide on the DVD/VCD/Bluray rental price package that
suites you best. An online registration process would be asked to get
completed and then you can select the DVD/VCD/Bluray titles that you
would like to watch at home

 Receive DVD's through the Post. Once you select the DVD/VCD/Bluray
provider, you can order DVD/VCD/Blurays and get them delivered to your
home through post

 Watch & Enjoy your DVD. On receiving the DVD/VCD/Bluray, you can
watch it at your leisure time.

 DVD is posted back to the online rental store. Once you finish
watching DVD/VCD/Bluray, simply put them in the prepaid envelope
provided and post it from your nearest post office/post box. Once your
DVD/VCD/Bluray rental service provider receives the DVD/VCD/Bluray, the
next one from your list would be selected and posted back to you.

Types of plans

Most companies provide variations on five basic types of membership plans:

Unlimited
No maximum on the number of movies one can rent per term. Though there is a
limit on the number of titles that one can rent.

Limited, capped, monthly maximum

Limit on the number of discs customers can have at any one time, and also a
maximum total of discs that can be rented.

Package

Involves sending a certain number of discs together. Sending and receiving in

the same package for an amount of specified time. Avoids hassle of sending and
receiving discs independently.

Individual Rentals

Allows individual rentals for a fixed fee with no monthly fee. The fees might vary
depending on type of title, popularity of title and similar parameters.

Peer to Peer Trading

Individuals are able to exchange items directly with other consumers, using a
company's services. This usually happens because of common interests of
consumers. The rental provider provides a common platform.

Major Players in online rental market:-

• Netflix

• Blockbuster

• Lovefilm

• Outnow

• Clixflix

• Bigflix

Netflix

Netflix was founded in Founded in 1997 by Marc Randolph and Reed Hastings
offering online flat rate DVD and Blu-ray disc rental-by-mail and video streaming
in the United States. It has a personalized Video Recommendation System and
worker Oriented Culture. In September 2004 Netflix faced Consumer Class Action
Lawsuit for throttling and in January 2005, Netflix changed its terms of use to
accommodate throttling.

Services Offered

Services Offered by Netflix are:

Disc rental - Netflix's most popular plan cost US $16.99 (plus tax) per month

Internet streaming - Virtually all subscribers are entitled to unlimited Internet

Streaming

 Profiles - One Subscriber Account but multiple users on it

Netflix’s competitive advantages and disadvantages relative to Blockbuster

Advantages Disadvantages

 No late fees or due dates  Lack of immediacy because of

which customers have to wait
 Netflix has an excellent to receive DVDs
Internet site and an existing
Web-based logistics  Customers cannot ask
infrastructure knowledgeable sales clerks
for information on the
 Customers do not have to substitute DVDs or purchase
return videos in store used and new DVDs

 No waiting in the line at  Blockbuster has potential

store. Its titles are hardly out synergy due to its operating a
of stock Web site and stores

Netflix’s competitive advantages and disadvantages relative to Amazon

Advantages Disadvantages

 Internet site that is devoted only  A small customer base as

to DVD rentals, and its long-term compared to Amazon
commitment to DVD rentals
 Smaller logistics infrastructure

 Amazon has a considerable

experience as Web-based
retailer
 Market Scenario
Further, we will have a look at the overall market scenario for online dvd rental in
India and the world.

As we know, the DVD rental by mail industry was pioneered by the US company
Netflix, launched in 1997. In India, online rentals really took off only since 2005,
and even now, not many people have heard of them.

However, unlike the West where DVDs are sent through the postal system, in
India nearly all providers rely on courier services. This dependence on couriers
eats in on the profits as well as the timely delivery of dvds. Studies suggest that
there are three main reasons online rental penetration lags the West—

 Internet is not widely used due to lack of availability.

 Piracy and Low cost operators are abundant.

 Consumers are still wary for carrying out online transactions.

 Current consumer base is only the high disposable income group in

metros and Tier-1 cities.

Growth potential though is astounding. The home video-mostly rental market —

was estimated to be about Rs 4 billion in 2005. Over the past years, it has grown
by about 15-18 per cent per year. It is expected to grow to about $2.4 billion by
2010. (Source: The Guardian) India has approximately 15 million DVD players
and this figure is expected to touch 70 million by 2010, which translates into a
vastly untapped video rental market. As the number of dvd players goes up so
will the demand for dvds. Thus if positioned properly we can accrue benefits of
tie-ups. Like buyers of dvd players get free trial membership of our services and
so on.

Since the nature of delivery is courier-based in India, most companies only serve
certain metropolitan areas and there is yet to be a truly large-scale, nationwide
service. The services get limited essentially by the reach and performance of the
couriers rather than anything else. This proves a big disadvantage. Thus by
formulating a better model to handle logistics, we may really be able to develop
a pan India delivery system that reduces the dependencies on external vendors.

Competition
We will study the competition amongst the players in the market and outside the
market.

In Market
These are the players already existing in the online rental market. Following are
their differentiators:

 Clixflix DVD Rental (First Mover)

Technically advanced, family-run site serving Mumbai area in tandem with

seven stores; cheap prices, but unfortunately late fees are a concern.

 Seventymm DVD Rental

India's largest DVD rental service and in our opinion, the best; excellent
site design and expanding fast.

 Movie Mart DVD Rental

One of the best online DVD rental service, boasting excellent site features
and prices.

 Bigflix DVD Rental

Large, modern, well-funded service with great promise if it expands.

Backed by the powerful ADAG group.

Source www.india-dvd-rental-
guide.com

In addition to these there are several small players but many of these lack the
technical expertise and are plagued with issues of late delivery, recover and
online transfer of money.

Furthermore, we will have a look at the customer perception of various online

rental players in terms of:

Value: What the customer thinks is his value for money.

Design: Design of website in terms of ease of use and security.

Service: It’s a measure of customer service in terms of “dvd turnaround

time”.

Titles: Estimate of the various titles it has in the collection as claimed by the
company.

Locations: The cities in which the operator offers services

Out of Market competition:

Despite of sound growth expected in the home dvd we face challenges on the
following fronts :
• Wide spread piracy and increasing demand for the same.

• Operators like MoserBaer, TSeries that have come out with very
reasonably priced dvds which are already available in organised retail
chains.

• Increasing number of DTH TV operators offering wide range of movies

to be watched obviating the need of dvds in the first place.

Conclusion :-

Despite of sound growth expected in the home dvd we face challenges on the
following fronts :

• Wide spread piracy and increasing demand for the same.

• Operators like MoserBaer, TSeries that have come out with very
reasonably priced dvds which are already available in organised retail
chains.

• Increasing number of DTH TV operators offering wide range of movies

to be watched obviating the need of dvds in the first place.
• Tie-ups with retail chains and corporates

• Better logistical Framework

• Tapping in social networking sites for promotion.

References:-

• Online DVD Rentals.

Cohen, Alan. PC Magazine, 5/6/2003, Vol. 22 Issue 8, p144, 1/3p; (AN

9513886)

• Making ONLINE RENTALS Click(cover story)

Wagner, Holly J. Video Store, 3/28/2004, Vol. 26 Issue 13, p1-18, 2p, 1 Color
Photograph; (AN 12694883)

• http://www.articlesbase.com/art-and-entertainment-articles
• http://www.iseeq.com/c/dvd-rental.htm

• "Netflix delivers 1 billionth DVD". MSNBC. 2007-02-25.

http://www.msnbc.msn.com/id/17331123/.

• (2006-04-04) Hastings; W. Reed (Santa Cruz, CA), Randolph; Marc B. (Santa

Cruz, CA), Hunt; Neil Duncan, Approach for renting items to customers.