Saturday, August 28, 2004

In praise of Netflix

No, this is not a paid endorsement for Netflix, the online DVD rental outfit. But we at Mellow Monk are hooked on the mellowness-enhancing convenience of Netflix and want to see this young company survive and thrive so that we can all continue to enjoy it.

If you’re not familiar with the Netflix system, here’s how it works: You sign up online and create a “queue” of movies you want to see. And Netflix has just about every movie released on DVD, including old movies, foreign films, and documentaries. Everything. As soon as your account is activated, Netflix sends you whatever movies are first in the queue. They come in the mail in a mailer that includes a postage-paid return mailer. When you’re done watching the DVD, you place it in the return mailer and drop it in the nearest mailbox. Once Netflix receives the DVD, it sends you the next movie in your queue.

The subscription fee is a flat monthly fee. There are different plans that vary in price depending on how many DVDs you want to have “checked out” at the same time. On the three-at-a-time plan, you can have up to three DVDs out at a time. If you have three out and return two, you get the next two in your queue sent to you. Return all three, and you get three more.

Netfix has definitely reduced the stress in a lot of people’s lives by eliminating the need to go to the video store to rent or return movies--and by eliminating outrage at the sometimes questionable late fees. If you check the corporate annual report of some of the big movie-rental chains, you’ll see that those late fees account for a significant portion of their revenues. At Netflix, the flat fee means that the more movies you watch, the more value you get for your money. We like that system and the philosophy behind it.