Netflix is a video rental company whose primary business model is that of a subscription content service. Customers rent DVDs via the Internet delivered by mail or download movies directly from the Internet via streaming to their home PCs ("Media Center," n.d.). Customers select from several Netflix subscription plans offering varying numbers of DVDs/downloads per month and then choose the DVDs they want to watch next from an online database. The company's revenue model is that customers pay for subscriptions in order to obtain viewing privileges of a certain number of DVDs per month. Netflix is part of the video rental industry, which has changed substantially in recent years, in large part due to the advent of Netflix. Netflix's policy of not charging late fees was eventually adopted by Blockbuster as a move to regain competitive advantage. In addition, the contents of Blockbuster stores are changing because the bulk of their business is no longer selling DVD rentals, "Your average Blockbuster store...is becoming less of a movie rental venue these days. The store walls are covered in new releases by the bucketful, and the floor space in between holds about twenty chest-height display racks" with half of the space taken up by "video games, snack foods, and used discs for sale" (Bylund, 2006). Moreover, Blockbuster now offers an online video rental subscription service virtually identical to that of Netflix. Netflix has changed the face of the industry.
Netflix's competitors include video rental bricks-and-mortar stores such as Blockbuster Video and Hollywood Entertainment Corporation, Redbox video rental kiosks located at grocery stores and other retail establishments, as well as other online video rental sites ("Competitors," 2008; Redbox, 2008). Redbox offers several advantages-convenient location, low rental price-only $1.00 per night-and no late or hidden fees (Redbox, 2008). For customers looking for t...