Home delivery

• Article
• Comments ()
• Click-2-Listen
• Videos

By

The online DVD war is escalating as home-delivery popularity grows and the industry expands.The three current rivals: Netflix, Blockbuster and Wal-Mart are fighting for a significant part of the growing online DVD rental business -- which accounts for a small fraction of the $8.2 billion U.S. movie rental industry.

The threat of a big electronic-commerce company -- Amazon.com -- joining the competition has the businesses adjusting prices and fine-tuning their models to compete effectively.

The businesses look identical right down to the Web site's layout and the envelopes the DVDs arrive in.

For a monthly fee ranging from $17.36 and $17.99 -- depending on the company -- consumers can choose from thousands of movie titles. The first three available titles get sent to their homes. When one DVD is returned the next DVD on the movie-renter's list is sent.

There is no limit to the number of DVDs that can be rented during the month, no due dates, no late fees and no shipping fees.

And that's the appeal, which is evident by the growing number of subscribers, said Dennis McAlpine, an analyst and managing director for McAlpine Associates in New York.

"The growth of Netflix says the concept itself has gained acceptance," Mr. McAlpine said.

Netflix, the industry leader and pioneer that started in 1999, has 2.3 million subscribers and expects $500 million in revenue this year, said founder and Chief Executive Officer Reed Hastings.

Mr. Hastings expects Netflix, which offers more than 25,000 movie titles, to have more than 4 million subscribers by the end of next year and 5 million in 2005.

"We are constantly raising the bar," Mr. Hastings said.