How upstarts continue to cause upset
Many of the best new businesses are launched in response to customer frustration with what the market currently has to offer. Few, however, manage to make such in-roads into the industry they set out to improve as online DVD rental start-ups.
The industry owes its creation to the much-hated late fees charged by what are still called video stores years after they replaced VHS cassettes with their less bulky digital successors.
ADVERTISEMENT
A decade since an arthouse cinema fan called Reed Hastings was inspired by a $40 video store fine to launch Netflix in the US, the online upstart’s revenues are expected to reach nearly $1bn this year, which represents 12.5 per cent of the US video rental market or four times what Blockbuster used to earn in late fees.
Similar services started in the UK only in 2003 and now account for an estimated 25 per cent of the country’s entire rental market.
The consequences for the local video store seem bleak. In the UK, shops are closing at a rate of three or four a week, and one chain
