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New Economy; DVD's have found an unexpected route to a wide public: snail mail.

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September 23, 2002, Section C, Page 4Buy Reprints
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IT has been a long-cherished dream of the digital age: video on demand. That's the term used for the delivery of cinema-quality movies to television households, with each consumer choosing what to watch and when to watch it.

But the technical challenges have been a deterrent. The main obstacle for cable systems has been creating and maintaining a sufficiently large database of movies. The problem for Internet systems has been network circuits too narrow to carry data files the size of movies, which can be four billion to nine billion bytes each.

In the last year, though, a flourishing digital video-on-demand market has developed, thanks to the least probable of carriers: the United States Postal Service.

Because of cost advantages and, in some cases, even an edge in speed, the Postal Service, FedEx and other physical delivery services now seem to be the dominant mechanism for bringing data-rich digital content, on demand, into the nation's households.

The secret of the Postal Service's digital success is the DVD, a plastic disc that costs about a dollar each to manufacture in quantities of a thousand and only 37 cents to mail. The public's rapid embrace of the DVD format since its introduction in 1997 has been well documented, both in terms of sales of DVD player consoles and the discs themselves, which Hollywood and distributors have chosen to price as a for-purchase product -- as opposed to the rental-market economics on which the videocassette business was based when it emerged.

And yet a brisk rental market for DVD's has also developed. Much of the rental activity is conducted by companies like Netflix, CafeDVD, QwikFlicks and DVD Avenue, all of which let customers choose their movies from Web sites, but deliver them as DVD's through the mail. (With most of these services, customers pay monthly subscriptions and receive other DVD's once they have mailed back the movies they have already watched.) If this system does not fulfill the immediate gratification implicit in the typical video-on-demand pipe dream, at least it is allowing real people to watch real movies of their own choosing.

Andrew Odlyzko, the director of the Digital Technology Center at the University of Minnesota, says that the cost to the service provider of transmitting a data file the size of a typical DVD movie over the Internet could be nearly $20. What's more, a home user with a 56-kilobit-a-second modem could wait two weeks for a movie to download -- much longer than the three days the post office estimates it would take to mail a DVD coast to coast.

And while Hollywood copyright lawyers get nervous when they contemplate the online distribution of digital movies, the DVD is a well understood and trusted format -- at least as long as the digital discs remain as difficult for the typical user to copy as they are today.

All these factors are behind the success of Netflix, one of the first companies to recognize the opportunity in building a plastic broadcast network. The company mails about 190,000 discs each day to its 670,000 monthly subscribers.

How much data do all those discs contain? Ralph Tribbey, the editor of the DVD Release Report, an industry newsletter, says that many of the most popular, big studio movies are released on the DVD-9 format, which can hold 7.95 gigabytes, or billions of bytes, or the DVD-10 format, which can hold 8.75 gigabytes.

''The big releases need all of the bandwidth they can get their hands on,'' Mr. Tribbey said, to carry the multiple picture sizes, additional scenes, making-of-the-movie documentaries and other add-ons.

Some of the older releases, without the extra material, use the less expensive DVD-5 format, which holds about 4.3 gigabytes. Still quite rare are more voluminous formats like the DVD-18, which can store up to 15.9 gigabytes.

Assuming that the average disc Netflix sends out contains 8 gigabytes, that one company alone may be mailing out about 1,500 trillion bytes, or terabytes, each day.

Estimates vary on how much data the Internet carries in North America each day. RHK, a research company in San Francisco, says the number exceeds 4,000 terabytes, while Professor Odlyzko argues that the Internet daily traffic flow is only about 2,000 terabytes -- or only about a third more data than the amount Netflix ships.

Of course, Netflix is not the only company mailing rental DVD's. Video Store magazine estimates that, beyond rentals, about 1.5 million DVD's, or 800 terabytes, are sold each day through Internet or telephone orders and dispatched by mail, FedEx or other parcel service.

David Farber, a University of Pennsylvania computer scientist who was an early architect of the Internet and is a Netflix customer, says that he does not expect the Internet to catch up with the DVD Pony Express any time soon.

''It's going to be years before we get the bandwidth,'' Mr. Farber said. ''When I sit back, I want the quality that comes with a DVD; I don't want to look at a 2-by-2 hole, which is what you get with the Internet'' when watching video on a computer. Where the Net pays, he says, is when people say, ''I want it, and want it now.''

Meanwhile, watch for high-quality digital movies coming to a mailbox near you.

A version of this article appears in print on  , Section C, Page 4 of the National edition with the headline: New Economy; DVD's have found an unexpected route to a wide public: snail mail.. Order Reprints | Today’s Paper | Subscribe

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