• it also had some obvious disadvantages.

 Without retail locations, it was hard for people to

find it.  

• Moreover, because its customers received their videos by mail, the service was somewhat
slow and cumbersome.  

• People couldn’t just pick up a movie for the night on their way home.

• In the beginning Netflix used the per rental charge model as other companies plus the
shipping charges. However Netflix soon realized that it was spending $100 to $200 for a
customer to make one $4 rental.

• As a solution, in late 1999, Netflix started the prepaid subscription based model.

• The new model allowed greater customer retention, turned the long delivery time to an
advantage and most importantly allowed Netflix to offer “unlimited” DVDs per month.

• The new “all you can eat” model was an attractive alternative to the traditional per-day fee
structure with late fees. 

• It made several subscription plans available to subscribers that allowed customers to

determine how many movies they wanted have at their home at a time

• In 2007 Netflix offered a range of subscription choices each allowing the customer a
different number of movies that could be simultaneously rented .

• These ranged from a basic plan allowing up to 2 rentals per month, rented one at a time to a
plan allowing four rentals out at one time with unlimited monthly rentals

•  Currently, Netflix's disc rental memberships range from $7.99 to $19.99/month, including a
free one-month trial and unlimited DVD exchanges.

• In 2000, when Netflix had just about 300,000 subscribers and relied on the U.S. Postal
Service for the delivery of their DVDs, they were losing money and offered to be acquired
by Blockbuster for $50 million.

• They proposed that Netflix, which would be renamed as Blockbuster.com, would handle the
online business, while Blockbuster would take care of the DVDs, making them less
dependent on the U.S. Postal Service. The offer was declined