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DVDs By Mail

In the Competition for DVD Rentals by Mail, Two Empires Strike Back


YOU might not imagine that there's a single movie-distribution channel left to invent. These days, a movie can reach you by pay-per-view, on a plane, at the video store, on a TV movie channel, on the Internet, at the front of a Greyhound bus, in the second row of a minivan or even - get this - in a movie theater. (Hey, it could happen.)

Not to seem ungrateful, but none of these mechanisms deliver the holy grail: any movie, any time. There is, however, a low-tech distribution channel that comes pretty darned close: DVD rentals by mail.

Seven years ago, Netflix invented the category, the business model and the prepaid two-way shipping envelope. Now, as three million subscribers are helping Netflix hit its profitable stride, Blockbuster and Wal-Mart have entered the market, taking a page from the Netflix playbook.

Actually, they've taken pretty much the entire playbook. All three services look and work almost exactly alike. Netflix must be furious.

The fun begins at each company's Web site, where you can look over its DVD collection. Netflix and Blockbuster list 40,000 and 35,000 titles, many times what you'll find at the video store. Wal-Mart brings up the rear with 16,000 movies.

Using a Search box, New Releases lists, movies by category and so on, you build a list of the movies you want to see, in the order you want to see them. This movie queue is a big deal; building it and customizing it give you the same sense of achievement as setting up your iPod playlists.

A day or two later, the first three discs arrive by mail, packed in a three-layer shipping envelope. After watching a movie, you rip off the top layer of the envelope, revealing the return address. When the company gets that DVD back, it mails you the next one in your queue.

Where you live determines the mailing times. Netflix has 30 distribution centers all over the country; Blockbuster has 23, and plans to add 7 by June. (Wal-Mart brings up the rear again with 14.) In metropolitan areas, if you ship a movie back on Monday, you'll generally get the next one on Wednesday or Thursday.

The appeal of these companies lies primarily in their convenience, vast selection and accommodation of your quirky tastes. But there may also be an economic attraction. Each company charges a flat monthly fee. For example, Netflix's three-DVD plan costs $18 a month; Blockbuster's, $15; Wal-Mart's, $17.36. (What's the matter? Focus groups didn't go for $17.37?)

For that money, you can watch as many DVD's as the Postal Service can bring you, as long as you never have more than three at a time. (Other plans are available for lighter or heavier appetites.) If you watch and return three movies a day, you could theoretically watch 40 DVD movies a month, all for the same $15. True, you wouldn't have a life, but you'd be paying only 38 cents a movie.

The best part is no late fees and no deadlines. A DVD can sit on your shelf for weeks, waiting for the mood to strike you. (That tends to happen with movies you've heard are great but depressing, like "House of Sand and Fog.") The rental company doesn't care; it is paid the same amount whether you return the thing or not. In other words, these plans banish one of life's nagging worries: the fear of racking up huge late charges.

As you can imagine, starting a DVD-by-mail operation is an enormous logistical challenge. In the early days, Netflix horror stories (scratched or lost discs, long delays) were commonplace. These days, though, Netflix's act is decidedly together; its customer service stories sometimes verge on the heroic. ("I once somehow managed to mail back one of my own DVD's in a Netflix return envelope," one reader wrote to me. "I was certain that I would never see that disc again, but I sent an e-mail to customer service anyway. I got a prompt reply saying that they would locate my DVD and send it back to me - and they did. No charge.")

Netflix ( has the most subscribers, too: three million customers, versus 750,000 for Blockbuster. (Wal-Mart doesn't disclose its membership numbers.) And as it turns out, 800-pound gorilladom has its privileges. You'll find far more customer movie reviews on Netflix, which can shield you from renting duds. And Netflix's power in the industry occasionally translates into exclusives and early availability; Netflix had "The Incredibles" in my mailbox on the very day it was released by Pixar. (Blockbuster - no small industry player - says that it will soon announce exclusives.)

By their admission, Blockbuster ( and Wal-Mart ( are still playing catch-up. Wal-Mart, for example, has only a small fraction of its rivals' movies and distribution centers. It is often the last of the three companies to get a new movie in stock. Its Web site doesn't offer any customer reviews. Surprisingly, its three-DVD plan is not even the price leader (Blockbuster has that distinction). So unless you believe in rooting for the underdog - has that word ever appeared in the same sentence with Wal-Mart before? - there's no good reason to choose it.

Blockbuster's DVD-rental Web site is a joy to navigate, but its status as a fledgling seven-month-old service is sometimes evident. For example, it tends to be overly cautious when estimating when you'll get the movies in your queue. The day before its release, "The Incredibles" was listed as "very long wait (six weeks or longer)," but it arrived in three days. And the Blockbuster site occasionally greets you with: "Sorry, but we needed to do a little housecleaning. Please check back later."

But Blockbuster offers an irresistible feature that its rivals will find impossible to duplicate: two downloadable rental coupons a month for anything from a Blockbuster store: DVD movies, VHS tapes or even video games. Movies-by-mail is great, but it doesn't approach that "Sorry about your day, honey; let's go pick up a movie" spontaneity.

Nor is that the only twist Blockbuster has, ahem, in store. Later this year it will increase the number of distribution centers by as much as 15,000 percent when it invites its 4,500 local stores to become DVD mailing centers. This audacious master plan ought to shave DVD shipping times drastically. (If the local store doesn't have the movie you want, one of the regular centers will send it out instead.)

There are, in other words, two winners here. Blockbuster is the value king, undercutting Netflix by $3 a month and offering in-store rentals; it's as though it is reimbursing you for tolerating its start-up glitches.

Netflix is the service king, the smoothest and the most reliable program. It's the only outfit with highly evolved features like separate queues for each family member (including individually addressed envelopes), each limited by movie rating, if you like. Netflix also offers far more plans than Blockbuster or Wal-Mart; you can sign up to have any number from two to eight discs out at a time, at prices from $12 to $48 a month. For busy people, a two-DVD plan is especially attractive; Blockbuster offers no such plan.

Before you cancel HBO and tear up your Blockbuster card, though, some words of caution. All three companies ship each DVD in a bare-bones envelope, so you don't get to see the artwork or the liner notes. Bonus discs count as separate titles. Scratched or unplayable discs are an occasional nuisance. (At each company's Web site, you can report the damage with one click. The company takes the DVD out of circulation and sends you a replacement.) Discs sometimes disappear in the mail, too; fortunately, you're not charged (at least if it doesn't happen with suspicious frequency).

Otherwise, though, the DVD-by-mail distribution channel is a brilliantly conceived solution to a classic new-millennium problem. You get exactly the movies you want, almost when you want them. Don't look now, but "movie channel" has just acquired a whole new meaning.


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