Netflix Gets Patent For Online DVD Rentals

[Mutt]

was this already posted here? this is a pretty valuable patent, lots of porn DVD rental services are popping up including one pushed by CE.


CHICAGO, June 24 ? Netflix Inc. said Tuesday the U.S. Patent & Trademark Office issued the company a patent that covers its online subscription-based DVD rental service, but it has not decided what action to take against rivals in the growing market.

SHARES IN THE Los Gatos, Calif.-based company rose as much as 11.5 percent in early trading. Analysts said the increase was likely due to eased investor concerns about the sustainability of Netflix?s business in light of the patent.
?This would give everybody the impression that there?s ... some level of protection of future cash flows to the company,? said Delafield Hambrecht analyst R.J. Jones, who has a ?hold? rating on Netflix stock. ?For the near term, this provides a way for them to defend against competition.?
Jones, who does not own stock in the Netflix and whose firm does not do banking for the company, said Netflix will likely take some action against competitors, whether it be lawsuits to drive them out of business or seeking royalties. Netflix filed its request for a patent for its business process in 2000, he said.
A Netflix spokeswoman said the company has not contacted competitors, including Wal-Mart Stores Inc. and Blockbuster Inc., and has not decided whether to pursue legal action.
?We have not decided on what the next step is,? Netflix spokeswoman Lynn Brinton said. ?We are focused simply on executing in the market place, where we feel the battle for market leadership is going to be won.?
Netflix?s options include suing for patent infringement, licensing the patent to rivals or doing nothing, said Michael Epstein, a New York City intellectual property attorney.
A likely defense of any rival would be the obviousness of the process, Jones said. Netflix also could pursue action against small rivals first before turning to Wal-Mart and Blockbuster, he added.
Netflix is the leading U.S. online DVD renter, commanding about a 95 percent share of the market. It makes its money by charging a monthly fee and directly shipping DVDs to customers, who make their choices on the Internet.
A Wal-Mart spokesman said the Bentonville, Arkansas-based company was unfamiliar with the patent grant. It first outlined its push into the hotly contested DVD segment last fall.

Analysts have seen Netflix as particularly vulnerable to the world?s largest retailer, whose size and scale could give it more clout. It charges almost $19 a month to rent as many DVDs as customers like but no more than three at once.
Netflix, launched in 1998 and sporting more than 1 million subscribers, allows customers to rent as many DVDs as they want for the monthly fee, with three movies out at a time. Customers can keep the DVDs as long as they like and they are delivered directly to the subscriber?s address via first-class mail.
A spokesman for video rental chain Blockbuster said the Dallas-based company had not seen the patent and declined to comment immediately. It purchased a DVD rental company last year and relaunched it as filmcaddy.com in the fourth quarter.

[<IMX>]

Jeez. I thought these "business method" patents were supposed to end quickly.

I wish i had 50k a year to waste on filing bullshit patents.

[quiet]

i thought i read somewhere that cyber erotica was getting into this biz big time...

maybe i'm wrong?

[BigFrog]

how on earth can you patent that????

[Marcus]

I can't believe they wont rent out adult movies.
They're throwing away a goldmine.

[Brown Bear]

What a BS patent. Thats like Blockbuster patenting the concept of retail video rentals.

[KRL]

If you ever come up with a great new idea you wouldn't be blasting patents so much.

Business methodology patents are just as deserving as product inventions.

I'm a partner in a company that spent 2 long grueling years developing a dynamic new methodology for the healthcare industry. We invested over $1 Million. We didn't invent a new product, just a more efficient and high tech way of doing a procurement process that every hospital has to deal with.

So why shouldn't methodology be protected too?

A publicly traded company just acquired that company. They would have never bought us if we didn't have our patents.

[Mutt]

i agree, if Netflix invented this method of online movie rentals they deserve a patent on it.

what i don't understand is how they can make money, i worked in a video store, all the money on a movie was made in the first six weeks of it being released, after than they were worth about 10 dollars, u could sell them to the public as 'pre-viewed' movies or to a wholesale reseller for like 6 or 8 bucks.
A new movie had to go out almost every night at 3.99 to make money.

These online DVD rental places have movies out for a week and longer - they don't charge by the night, but by the month, starting
at 19.95. Under the cheapest plan u can have 3 DVDs out at a time, keep them for as long as you want. Makes no sense to me - 3 brand new DVDs can be out a whole month and all Netflix gets is 19.95 in revenue and that's not even counting the shipping charges that Netflix and the others pay for. This definitely wouldn't have worked with VHS movie releases - those babies were $120 bucks apiece.

Um.......maybe i'm missing something. Then again when Paypal started I couldn't figure out how they what they were doing or how they were making money.

[slavdogg]

if the patent holds
it wont be long before blockbuster buyers them out

or another company to keep the patent away from blockbuster