Netflix Imitators Are Everywhere

For Dallas software engineer Adam Sills, entertainment is as close as his mailbox. As a subscriber to Netflix, he's long since given up on Blockbuster, where he used to rack up hefty late fees. "I'm a serial not-returner," he explains. "If I take out a movie I keep it for a month."

Now the flat-fee, revolving-rental model popularized and patented by Netflix saves Sills from late-fee purgatory by eliminating due dates. Instead, he keeps up to five movies at once. When he's done with one he mails it back in a pre-supplied envelope, and Netflix will send him another.

Sills was pleased enough with the service that when he did a search on Google for "Netflix and video games" and found GameFly -- a similar service that rents games for the major consoles -- he signed up immediately.

"I used to buy about a video game a month," he said. "That cost me about 50 bucks, and GameFly costs you 20 bucks a month."

GameFly is one of a number of online revolving-rental services that have sprung up in the wake of Netflix's success in the DVD-rental business. While Netflix and Wal-Mart are currently battling for customers in the mainstream DVD business, and Blockbuster is planning to offer a similar rent-by-mail service, dozens of upstart companies are handling media that Netflix doesn't touch: books, games and that old e-commerce standby, pornography.

Google's video-game rental directory lists nearly a dozen competitors to GameFly. Among the most popular are RedOctane and Gamelender. Each of these three offers the option to check out two games at a time for about $20 a month. GameFly offers a cheaper plan for people who only want one game at a time (and can deal with having no games while the discs travel through the mail), and both GameFly and Gamelender have more expensive options for more games.

GameFly's service adds another option to the mix: If you like a game, you can keep it, typically for $15 to $45, plus an extra $2 for shipping the game's box and instructions.

The adult movie arena is even more crowded than the market for games. The remarkably restrained company names include SugarDVD.com, WantedList.com, XRentDVD.com, Adult DVD Empire (and homoerotic offshoot GayDVDEmpire.com), Video Takeout, URentDVDs.com -- and the list goes on.

The specialized perks of these services include discreet packaging -- as discreet as an endless parade of plain white envelopes with DVD-shaped imprints can be -- and the ability to search for your favorite kink. WantedList.com, a leading lender, also offers website interviews with porn starlets and a naughty knowledge base called the Pornotron 6900. Taking out three movies at once typically costs around $23 per month, with service plans ranging from a one-video-at-a-time option to an eight-DVD porno cornucopia.

Another revolving-rental business, booksfree.com, applies the Netflix model to the oldest mass medium: print. For fees starting at $8 a month, booksfree.com sends paperback novels and keeps new ones coming as soon as borrowed books are returned. The company carries more than 40,000 titles in genres ranging from psychological thrillers to mysteries to time-travel romance. Plus, booksfree.com offers services for reading clubs, including discussion guides for selected books and a plan that provides multiple copies of the same book for a single monthly fee.

While many of these revolving-rental companies are thriving, none has the name recognition of Netflix. Moreover, only Netflix appears to have taken the effort to patent its method of business.

In June 2003, Netflix obtained a patent on a "method and apparatus for renting items." The patent covers "a computer-implemented approach for renting items to customers (in which) customers specify what items to rent using item selection criteria separate from deciding when to receive the specified items." In addition, it covers what it calls a "Max Out" approach, which allows a certain number of items to be rented simultaneously.

If enforced, the patent could conceivably turn all of Netflix's competitors, no matter what they rent, into paying licensees -- or run them out of business entirely.

Netflix spokeswoman Lynn Brinton makes it clear that Netflix isn't currently planning to send cease-and-desist letters to other revolving-rental companies.

"We think that a great business is based on a great service, not a great patent," she says. But she doesn't rule out enforcing it in the future, either, saying, "We haven't made a decision."

According to Brinton, Netflix is more interested in getting a stronger foothold in the video-rental business than expanding into new mediums.

"Right now we have 3 percent of the home-video-rental market," she said. "Instead of going into other markets, our future plans include international expansion and limited digital downloads."

As for adult movies, she defers to the vision of Netflix CEO and founder Reed Hastings. "Reed would say that he's just a prude and doesn't want to carry them," she said.