Archive for October 27th, 2006

Peerflix vs. Netflix

October 27, 2006

Most of my friends know that I am a rabid Peerflix fan. Hey, everyone has to have a hobby, right? 🙂 My apologies to my old high school pal, Reed Hastings, the founder of Netflix. Reed, I love you, too. And I am also a Netflix customer. But Peerflix—what an idea!

Netflix has to run distribution centers around the country where DVD mailers get opened and re-stuffed. Netflix has to print the mailers and pay for postage. Netflix has to buy the DVDs in the first place.

Peerflix, on the other hand, is just a web site. Peerflix has no distribution centers. Customers print their own mailers on their own printers and mail them directly to the next customer in line. Peerflix gets paid $0.99 for every DVD that gets traded!

Each service has advantages and disadvantages from the customer’s point of view. Netflix has the advantage that you can get whatever you want whenever you want it. But with Netflix, I feel pressured to get my money’s worth. If I don’t watch the DVDs I have and send them back quickly, I’m wasting money (because I pay by the month—regardless of how many DVDs I watch). The last thing I want is pressure to watch more TV!

With Peerflix, there is no time pressure. You own all the DVDs you have, and you can keep them forever if you want without any cost.

But Peerflix has its own peculiar downsides. Some titles are on many “Have” lists and few “Want” lists. These titles will arrive quickly if you put them on your “Want” list. Then, it will be hard to get rid of them. Depending on how lopsided the supply/demand is, you might get stuck with the title forever. In which case, you cannot replenish your “Peerbux” by trading it away. Other titles have the opposite problem: they are on many “Want” lists and few “Have” lists. These titles will take forever to get sent to you. The best titles are the happy medium ones that are plentiful enough to get to you in the first place, but will also be tradable after you are finished with them.

One thing I will say for Peerflix is that it has caused me to buy DVDs for the first time in my life. If I read the description on a movie and I really want to see it, but there are 0 copies available on Peerflix—I’ll look for it on Ebay or used on Amazon and buy it. If I feel it is a must-see, and it is worth a lot of Peerbux, and it is not available used, I’ll even buy it new. My psychology goes like this: “Hey, I have saved way more than 20 bucks on Peerflix already. Plus, I can easily trade this and get Peerbux when I’m done.”

Every time I buy another DVD—used or new—I expand the size of my in-house library—even after I trade it away (because trading away earns Peerbux that enable me to receive more titles from my “Want” list). I now have about 25 DVDs at home that I have not yet seen! That is incredible! How much would I have to pay EVERY MONTH at Netflix to have 25 DVDs at a time?

So here is a topic for you to discuss amongst yourselves: will Peerflix ever be as popular as Netflix? Or is Omar a looney-bird? Or both?

P.S. I forgot to credit Jackie Shadrake with turning me on to Peerflix. Thanks, Jackie! 🙂

P.P.S. I just found a wealth of posts about Peerflix on Brad Templeton’s blog.