Netflix provides a movie and television programming rental service at flat monthly fees. The company has no brick-and-mortar stores, and instead interfaces with its customers via the Internet and the United States Postal Service. A large number of titles are available on DVDs and Blu-ray discs that will be delivered to the subscriber by mail. In addition, a much smaller number of titles can be streamed to the subscriber over the Internet.
Renting DVDs From Netflix
The heart of Netflix's business is renting DVDs via the US mail system. A new customer goes to the company's Website and subscribes to a plan. The plans are similar, except the more the subscriber pays, the more discs he or she can have on loan at any one time. Suppose the new customer signs up for the most popular plan, which permits a maximum of three discs out at a time.
After completing the subscription process, the new customer uses the company's Website to set up a list of desired titles. Netflix then determines the availability of the requested titles and mails to the subscriber discs containing the three available titles highest on the customer's list, along with prepaid return envelopes. When the subscriber mails a disc back to Netflix, the company sends the next available title that is highest on the customer's list. It's up to the subscriber to keep the list of titles up to date.
There are no late fees, and Netflix pays postage both ways. The subscriber can keep each disc indefinitely and pays nothing other than the flat monthly fee plus applicable taxes. The customer can cancel a subscription at any time without incurring extra fees.
Netflix has many shipping points across the US and claims 95% of their customers usually receive a DVD one business day after it's shipped. But there are no guarantees as to availability or turn-around times.
Netflix also offers streaming movies and TV shows.
Plans and Their Prices
You can choose a streaming-only plan, a DVD-only plan, or to subscribe to both.
- The price is 7.99 a month for the 1 DVD out at-a-time plan.
- The unlimited streaming plan is $7.99 a month.
- If you subscribe to both unlimited streaming and unlimited DVDs will be $15.98 a month ($7.99 + $7.99).
- You can keep each disc as long as you want without paying extra.
- Large selection of titles, including many hard to find.
- No need to go to a store — you can do everything from home.
- There's usually a two- or three-day delay between deciding what you want and getting it.
- You are likely to be put on a waiting list to receive titles for which demand exceeds supply.
- Many people find browsing on the Internet less satisfactory than browsing in brick-and-mortar stores.
Netflix vs. Blockbuster
At its core, Netflix's business consists primarily of interfacing with subscribers via the Internet and sending them DVDs via US mail. Its only major competition for this business comes from the mostly similar online rental service run by Blockbuster. The two companies are more or less competitive in terms of price, but there are differences in what customers get. Some of these differences are discussed in the article "Netflix Versus Blockbuster."
The main advantages to a Netflix subscription that most people point to are (1) convenience — you can do everything from home and never have to go anywhere, (2) no late fees or due dates — you can budget for a fixed cost every month, and (3) you have access to a greater variety of titles than you would with any other way of renting movies. But there's a huge disadvantage in the minds of many because the Netflix system leaves little room for spontaneity. It works best for people who are willing to decide well in advance what films they would like to get around to seeing sometime and are not overly fussy about exactly when those films are available for watching.
No discussion of Netflix is complete without a warning to potential customers who expect they should be able to maintain extremely high volumes of rentals. Some subscribers have tried this in the past and found the company has policies that slow down the stream of discs to high-volume customers. There was a class-action lawsuit related to this issue that is discussed elsewhere on this site. However, it appears that subscribers with typical rental patterns suffer no negative consequences as a result of these policies.
You can try out Netflix at little or no cost. There's a two-week free trial and, if you need more time, continue with a low-cost plan. You don't have to make much of a commitment since you can cancel at any time without incurring any extra fees.