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Tuesday, January 20, 2004

One of the hottest trends in the entertainment space is the rise of online dvd rental. Hot on the heels of Netflix in the US, a number of new online players have launched in Australia with a view to challenging the stranglehold of video chain stores.

The video rental market in Australia is worth over AU$500 million a year, and is driven by a business model where the majority of operator margins are controversially derived from late fees. Online DVD rental players have an alternate business model where subscribers pay a monthly fee for unlimited rentals with no due dates or late fees.

The leading player in Australia is HomeScreen Entertainment, which is part owned by Hoyts, the major movie exhibition network in Australia. HomeScreen subscribers pay AU$8.50 a week for unlimited DVD rental, with 3 DVDs out at a time. Customers build a "Must-See list" of DVDs they want to watch from a library of over 8000 available titles. DVDs are sent out via the mail and return via supplied prepaid postage. There are no late fees, so customers can hold on to a DVD for as long as they like.

In addition to the common-place search and browse features, HomeScreen also offers something new - a 'recommendation engine' that displays recommended DVDs designed to match the tastes of each individual customer.

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