Big guns line up for a shot at the online DVD rental market

WHILE it’s too early to gauge the long-term prospects of subscriber-based online DVD rental companies, the increasing number of new players entering the market suggests strong support for the idea.

Western Australia has proved a breeding ground for the online rental model, with DVD Direct establishing one of the first online DVD rental companies in Australia when it launched in August 2002.

Then, late last year, the Optus-backed Quickflix launched a nationally focused service from its Perth-base.

A number of eastern-States-based outfits have launched DVD rental companies and, more recently, Telstra announced its plans for fetchmemovies.com, designed to target existing broadband customers.

The basic idea involves an subscription-driven online shopfront where a customer, for a set fee determined on the number of DVDs required, can select from a range of DVDs or games, and have them home delivered through Australia Post.

Customers choose from a range of DVDs that they place in a queue in a personal library. There are no late fees with most business models and the DVDs are mailed out in standard envelopes as subsequent selections are returned.

Quickflix and DVD Direct have concentrated their marketing online, targeting existing Internet users, but both companies say they are pleased by Telstra’s entry into the market, as it will increase awareness of the business concept.

Quickflix chief executive officer Stephen Langsford said the company had been aware of Telstra’s intention to launch a similar product into the market for some time.

“We think Telstra coming into the market is great because it endorses the model,” he said.

“The day that Telstra announced fetchmemovies our sign-ups doubled for that day.

“We think the Australian marketplace is large enough to sustain a few players in this space, but our model is that we will become one of the top three.

“To really be successful in this space you need infrastructure and enough working capital to fund new DVDs.

It is a similar story with DVD Direct, according to marketing manager Nasir David, who says his business has continued to grow and has in fact “benefited” since the launch of Quickflix.

Mr David said he expected a similar result following Telstra’s launch of fetchmemovies.com

“It’s been very good because it is increasing awareness of the product,” he told WA Business News.

“We’ll be happy to ride on their advertising coat tails.”