DVD-by-mail
DVD-by-mail is a business model in which customers order DVDs and similar discs containing films, television shows, video games, and other media to rent, which are then delivery to the customer by mail. Generally, all interaction between the renter and the rental company takes place through the company's website, using an e-commerce model. Typically, a customer chooses from a list of titles online and adds titles to a queue. As a customer's requested titles become available, the company sends them out. When the customer is finished with the disc, they mail it back to the company.
DVD-by-mail arrived in time to compete with video rental shops, but both have largely been overtaken in developed countries by video on demand services. As a result, formerly operating DVD-by-mail services, are now defunct.
Background
Most companies operate on the following model:- The customer joins the rental service, typically through an online e-commerce system and a website, and agrees to abide by a list of conditions, and provides some form of electronic payment.
- Once the customer has registered, they create a list of titles they wish to watch, which are ranked by the customer by priority.
- Titles from the list are mailed to the customer as they become available.
- The customer watches the films or uses the media and then sends the discs back to the rental company using the mail.
Variations exist; for example, some companies also offer video game rentals while others offer music. Redbox allowed users to reserve DVDs or Blu-ray discs online to retrieve and return the DVD at interactive kiosks located in various retail establishments.
Throttling
Given sufficiently fast mail delivery, customers on "unlimited" plans who return their discs quickly enough can receive enough shipments in a month that the company's cost of delivery exceeds the fixed monthly subscription fee, making this type of customer unprofitable. Even below this point, higher volume customers are less profitable than customers who receive fewer discs per month. If these customers become too numerous, there are various measures which the rental company can take.One is the so-called "throttling" approach, which received significant publicity with regard to Netflix. In this case, high-volume customers may experience a greater likelihood of shipments from alternative warehouses, when the nearest shipment center does not have the requested disc. Also, if there is a high demand for a particular disc, it is more likely that an infrequent renter will get priority over the frequent renters, with the latter receiving a movie further down on their list. They are also less likely to receive replacement shipments on the same day a disc is received. Similar "fair use" caveats can be found in the terms and conditions of leading UK companies such as LOVEFiLM. In Canada, Zip.ca switched to "capped" plans in part to avoid implementing throttling.
LOVEFiLM came under scrutiny from users over its claim to offer "unlimited" movie rentals. Some users reportedly found the company used long delays at the shipping stage to reduce the number of films a month a customer can rent. The company was subject to a dispute by the Advertising Standards Authority over the use of the word "unlimited" in their advertising. It was revealed that they practised throttling. The company itself claimed that this "fair usage" policy means all customers get a similar service.
On March 2, 2006, Blockbuster announced that their service does not implement throttling. "We don't prioritize our customers' movie fulfillment based on how often they use our service, and we don't limit the number of movies a subscriber receives each month," according to Senior Vice-President Shayne Evangelist. However, the terms and conditions each customer has to agree to in order to subscribe to the service states, "Blockbuster Online reserves the right to determine product allocation among members in its sole discretion. In determining product allocation, we use various factors including, but not limited to, the historical rental volume for each subscriber, historical number of outstanding rentals relative to the maximum number of outstanding Blockbuster Online Rentals allowed under a subscriber's plan, and the average rental queue position of Blockbuster Online rentals that have shipped to a subscriber in the past."
Major markets
The following is a summary of the major DVD-by-mail markets.Americas
United States
ended 2008 with 9.39 million customers. Around 4.2 million individuals in the U.S. still rented DVDs via mail from the company as of 2017. Netflix announced on April 18, 2023, that their DVD subscription services would be closed and the last DVDs sent via mail was on September 29, 2023.Blockbuster claimed 1 million online customers in August 2005, 2 million by March 2006, and finished the first quarter of 2007 with 3 million. By the end of 2013, Blockbuster had withdrawn from the DVD-by-mail market. Walmart briefly entered the market as well, but withdrew in 2005 and then went into a cross-promotional agreement with Netflix. There have been a number of smaller companies, some of which target specific niches:
eHit, the first such niche company, came online in 2000 targeting fans of Asian films; specifically Japan, China, and Korea, expanding to include other countries' films over time.