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With offline rivals beaten on price and choice, and alternative technologies still in their infancy, online DVD rental looks set to break new ground in the near future. Report Fiona Harvey
You can buy a DVD player for as little as pound 30 these days. The market has boomed in the last year, now outselling video recorders four to one, according to the British Video Association.
With the rise of the DVD a whole new ancillary market has sprung up: online DVD rental shops. These combine the convenience of the format with the simplicity of the Web for a generation of tech- savvy consumers.
Netflix in the US is a prime example of the phenomenon. It has gained 1.5m subscribers to a service it started in 1999, and has a market capitalisation of $1.5bn (pound 790m). UK firms have been quick to follow, with several launches since 1999, and a rash in the last few months.
Renting DVDs online is straightforward. You browse through the selection of titles available online and order with your credit card. The discs are sent by post, with return packaging so that they can be easily posted back to the rental firm. The small size of the discs is a key factor. Sending out VHS cassettes was impractical, given their size and fragility, but DVDs are compact and light.
"People like online rental because it's quick and easy and you don't have to drive to a video store that may not even have what you want in stock, and then drive back to return it," explains David Edwards, chief executive of Movietrak.
Because they don't need to maintain large physical outlets, online rental outfits can offer a greater choice of titles than offline rivals. "We keep our stock in one place and distribute it only by post, so we can...