Movie rental (Explicit time, implicit space)

Renting movies in the form of CDs has transformed in the past few years. There are different revenue management techniques used by movie-rental companies.
Movie rentals are an example of an industry that sells explicit time but implicit space. Traditionally, the customer rents a movie for a specific period of time. The space is defined by the owner in terms of the storage where they can store the movies and offer variety to the customer depending on the amount of space they have. The traditional stores offer discounts for renting more movies, discounts for returning the movies early or on time, as well as discounts for renting more movies each month. However, nowadays many stores are moving to a monthly subscription offer where the customers can rent as many movies in a month as they want. By doing this, they are making their revenues more predictable. This might be based on the assumption that customers will pay more thinking that they can rent unlimited movies, but ultimately everyone is too busy to actually rent too many movies per month.

It can be debated that the space is the number of movies in the given time frame that the customers can borrow or the space in the company where they store movies and provide variety and quick service to the customer as a result.

1. College town video
An example of the traditional approach is College town Video in Ithaca, where the customers go physically and select a movie, and then physically return it after 2 days. The store has fences such as a fine if the customer does not return the movie in the given time. They also manage time by offering a dollar in store credit when a person returns the movies in the "latest" section a day earlier. This way they can still earn more on a DVD my renting it out more number of times. Also, they only rent out the "special brand new arrivals" for only one night since they understand that there is more demand for new movies. They also protect themselves against customers not returning DVDs by taking credit card numbers of customers and making them sign an agreement that the card will be charged after a fixed number of days.
Collegtown video is also trying to earn ancillary revenue by offering CD cleaning and repair service where they can repair minor cracks in the CDs for a charge. They try to reduce the customer time in the store by offering an online catalogue of available movies.
http://www.collegetownvideo.com/43357.html?*session*id*key*=*session*id*val*


2. Netflix
Another company is Netflix. Netflix delivers movies by mail or offers the option to download movies online. In this case, the explicit time becomes the monthly subscription charge instead of charge per DVD. Netflix offers different plans for different types of customers to increase revenue. They have unlimited plans from $9-13 where customers have the option of having 1, 2, or 3 DVDs out at a time. They also have a cheaper limited plan where the customer can only rent 2 DVDs per month. They also offer a free trial to get customers used to this new system. http://www.netflix.com/HowItWorks


3. Blockbuster Online
Blockbuster online is a competitor to Netflix and offers similar free trails. Blockbuster advertises their competitive advantage over Netflix saying that the customers can return the DVD by mail or in-store. This makes it convenient for Blockbuster to get the movie back as soon as possible and earn more on each DVD by renting it out more number of times.
www.blockbuster.com/

4. Cafe DVD
Another online service, Cafe' DVD, tries to promote itself as being faster and always having the titles requested by the customer. They compete on price with Netflix and offer more DVDs for the same amount of monthly charge. They have a small, medium, and large plan priced differently for different customers based on the amount of movies that the customer rents.
http://www.cafedvd.com/cgi-bin/new/membership.html?id=tbwKRQyp