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Netflix, Inc. Message Board

  • dcham222 dcham222 Jul 16, 2002 6:21 PM Flag

    Have a video store

    On June 1st we started a subscriber program for dvd's.
    Rate of $24.95 per month/ 2 movie max./ no return date.
    Plastered the windows. Ran large ads in the local paper. NO LATE FEES EVER!!!
    Response has been phenomenal!
    Luckily there's not a Blockbuster for miles and miles.
    Got the idea after reading about Netflix.
    My inventory buying has more than doubled to go along with the increase in monthy revenue.
    Thank you Netflix.

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    • 24.95 month for 2 disks is more than double
      the cost of NFLX 2 disk version. He may be able
      to operate this as a single store but NFLX had
      to think larger. Paying full price for disks
      is very esxpensive. The new releases aren't any
      cheaper from the studios whether you buy 100k
      disks or 1, there is "no" price break.
      The studios make out better by revenue share
      but what's a startup to do.
      Maybe NFLX can advertise in your neighborhood
      and get your customers.

      • 1 Reply to rideoutthestorm
      • It very well might be double the cost of Netflix. But it's not so much how many the customer can have out at one time as how many movies a customer can rent in 1 month.
        And I bet you one thing.
        I can fulfill a customer's order on a hot new release before Netflix does.
        My store is 3 blocks from the post office.
        So let's see.....drive to the post office to return your rentals and wait for your next movie....or drive to my store and get a movie.
        Is Netflix a potential competitor? You bet it is. But I have no particular axe to grind with them. Competition is healthy. Keeps everyone on their toes.

    • Let me ask you some questions (your case could be very interesting for this board):

      - do you have revenue sharing agreements or do you own the movies?

      - if you own them, do you have any other variable cost related to renting a movie?

      - does this program have any other restriction? any limit to how many returns I can make during a week?

      - how much do you charge for a regular rental?

      - Blockbuster gets 30% of their revenues coming from late fees. Any idea on what's that % in your case? (that's money you'll lose).

      • 2 Replies to marketingfoolish
      • BTW
        The revenue increase is being used to grow our dvd selection rapidly. VERY rapidly.
        VHS shelf space is losing ground just as rapidly.
        Although we don't have Netflix's title selection yet (about 2800 titles at this point)we can pick up older titles sometimes for as little as $5.00. So we may get there someday.
        I've toyed with the idea of a subscription model for years but with the price the studios were charging for vhs tapes it wouldn't have worked. But with the price of dvd's, it works.

      • 1)no revenue share
        2)no other variable cost
        3)no restrictions yet, jury is still out. But we do offer a .50 cent incentive if returned within 2 days. Credited to their account and the accumulated amount goes toward next month's subscription. This accomplishes 2 things. Increases our available copies and keeps the customer from going anywhere else next month.
        4)normal rental is $3.99
        5) our late fee % was about 17%. Still collecting late fees on vhs but with the increase in dvd activity we think it MORE then makes up for any loss in that area.

        Keep in mind that we are early on in this and I probably can't answer some questions as we're finding things out as we go. But the numbers have improved dramatically.

        I also have other tie-ins in mind with buying a dvd player here, pre-paying for 11 months getting the 12th month of rentals free. Still working on that one. Kicking it around.

    • Oh, I forgot.
      We take reservations up to a week in advance.
      Man, the customers love it!

 
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