Netflix's rivals offer flat fees, too, and try to distinguish themselves

June 24, 2004

By CRAYTON HARRISON / The Dallas Morning News

Challengers are lining up to try to unseat online DVD powerhouse Netflix Inc.

Dozens of companies now offer movie rentals through the Web, charging a monthly rate for customers to check out movies without incurring late fees. Netflix, which introduced that price structure in 1999, has about 2 million subscribers, far ahead of the rest of the pack.

Some competitors, such as Wal-Mart Stores Inc., simply mimic Netflix's model and try to undercut the pioneering company on price. Others frame themselves as specialty sites, offering art-house movies, foreign films or other variations.

The big daddy of traditional movie rentals, Dallas-based Blockbuster Inc., is trying something a little different, copying Netflix's monthly subscription model but requiring customers to get and drop off their movies at the store instead of receiving and sending them through the mail.

Can any of these services compete with Netflix's popular service? I compared a handful and found that, although Netflix continues to reign, the pretenders are closing in.

Here's how Netflix and its rivals stack up:

Price. Wal-Mart may be known for its low, low prices, but it's not always the leader in the online move category. Who wins depends on how many movies you want to rent at a time.

Most services allow you to pick whether you'd like to keep two or more movies checked out at any time. If you're on a two-rental plan, for instance, you won't be able to get your third movie in the mail until you send one back.

As our chart shows, Netflix is more competitive on price in the two-rental plan and gets more expensive than many peers in three-rental and four-rental plans. Wal-Mart, meanwhile, does best in the four-rental category.

Delivery speed. Netflix has concentrated on building its distribution network in metropolitan areas, and it has done a good job, if delivery to my home in East Dallas was any indication.

Netflix movies showed up at my house the day after I ordered them, thanks, no doubt, to the Irving distribution center the company built in 2002. When I sent Netflix movies back to the company, I had new ones in my mailbox within two days without fail.

Wal-Mart needed an extra day, in most cases, to send movies to me. When I returned movies in exchange for new ones, the turnaround time was three or four days.

That was far better than most other services, which took as long as a week to send me my movies.

Blockbuster, of course, offered the most instant gratification. In exchange for sacrificing the convenience of having a movie delivered to me, I got the luxury of choosing the movie that best suited my mood at the moment and having it instantly available.

Selection. When Wal-Mart started its DVD rental service in 2002, Netflix clearly had a more diverse array of titles and a bigger volume of popular movies. Wal-Mart hasn't caught up yet, but it's much closer, with a better selection of independent films and a much lower likelihood that a movie is out of stock.

Gameznflix Inc., as its name implies, has the distinction of including Playstation, XBox and GameCube games in its rental plans.

GreenCine Inc. is a San Francisco-based service specializing in indie and rare films, making it a good bet for students or cinephiles.

CleanFilms Inc. offers movies stripped of dirty language, nudity and sex. Editors do a pretty good job of preserving the continuity of a film.

Blockbuster, of course, has new releases spilling from its walls, but its selection of older films is hit-or-miss. Blockbuster's service was the only one I evaluated that offers VHS movies.