Eric Bingham

DVDExpress' Biz Model Threatens Netflix

The key to the success experienced by NFLX has been ease of use. Not having to get to a physical location to return a dvd is huge. BBI's success has been due to its ubiquitous distribution network -- their stores are easily accessible to a very large % of the US population. And both these models allow for a huge selection of titles. So even though there's probably a 80/20 rule in place (or even 90/10) in terms of a few titles generating most of the rentals, the margins on these titles is much lower than library titles.

So while on a pure economic basis the arguement for this business model can be made, I see it in fact having the weakness of the BBI model without the strength of either NFLX or BBI's models. Rather than a virtual or physical retailer -- this is a semi-physical one which will not offer consumers anything other than an attractive pricing model which can be easily addressed by BBI and NFLX given their leverage with Hollywood.