Peerflix enhances DVD-swapping service

Movie-trading business model gets boost from revamped site, including social-networking section

Movie-trading business model gets boost from revamped site, including social-networking section

Sign up for DVD-trading site Peerflix, and your next movie may arrive at a huge discount, from a stranger in Tuscaloosa, AL.

That Peerflix user, BW866403, is currently at the top of the list of "haves" with 1,230 titles in his DVD library.

The three-year-old DVD-trading Web site banks on two premises: that people buy DVDs and only watch them once or twice and that the model for renting movies is archaic. Peerflix membership is free, and for 99 cents plus postage for shipping, users can keep each DVD they receive unless they decide to trade.

The Internet company has worked with Voce Communications of Palo Alto, CA, as its AOR since its launch.

Matthew Podboy, founder and client supervisor at Voce, says that with DVD prices now so low, the renting model that began when buying VHS tapes cost $90 has become outdated.

"What are the things you rent?" Podboy says. "An apartment, a car, a boat, a Rug Doctor if you're going to have a party. But why rent something that costs less than $100? Why not buy it and have a secondary market?"

Although Peerflix has been popular since it came out of beta testing in 2005, some problems have cropped up on the site. So the company, with the help of Voce, relaunched its Web site in December and made a number of changes to its service.

Instead of racking up credits in the form of "Peerbux," its own currency, the site now operates in real US or Canadian dollars, and users can opt to cash out instead of hanging on to credit.

"The cash-out really resonated well with people," Podboy says.

The site also developed a social-networking section that lets users form groups based on their favorite movies, genres, actors, directors, and so on. For example, in The Backlot, a Peerflix forum, discussion is presently brewing over whether Battlestar Galactica is the best TV show ever. But it's not just technogeeks. Fans are searching for Bettie Page DVDs, and a lot of parents are looking for hard-to-find children's titles.

Children's DVDs were the reason the business began. Billy McNair and Danny Robinson started the company in 2004, when McNair wanted to snap up the Baby Einstein DVDs that Robinson's child had outgrown.

The two saw an opportunity for more than that kind of trading, based on the concept that people tend to stockpile DVDs, says Dan Henig, Peerflix director of marketing.

"The idea really came from [the fact that] Americans have bought 6 billion DVDs, and they don't watch them," Henig says. "The average DVD sits on the shelf and collects dust."

Peerflix became a top DVD-selling site soon after its launch. It had 250,000 registered users as of December.

Voce has gotten coverage for Peerflix in newspapers, business publications, and other media around the country.

Henig says Voce has made good use of the media's various interests in Peerflix. Tech magazines and Web sites liked to look at the business model and compare it with other online startups, and mainstream media raised awareness of the site and drew in more users.

"Voce has done a great job of getting us in to business tech pubs that 'get' the model," he says, "and also got us on local broadcast to reach our core consumers."

He says that while outlets like Techcrunch.com and Red Herring write about the business model, Voce has also gained attention in places like The Wall Street Journal, Associated Press, Boston Globe, San Francisco's ABC TV affiliate KGO, NBC, and others.

Peerflix was also featured on Today about a year ago. The number of registered users has risen each time Peerflix has been featured on broadcast television, Henig adds.

Peerflix has natural competition in the form of digital media, but both Henig and Podboy say the movie-watching experience is still a physical process, so digital is not a threat to their business.

One thing the digital revolution tends to minimize is the fact that movies can't be enjoyed on a tiny iPod or laptop screen, for example, the same way they can be at home on your couch.

"My PC is not my entertainment center," Henig says. "[Digital is] not competing with enjoying a movie in a comfortable place."

As for the future, Peerflix is still making improvements, such as providing cover art to all its titles, a trade history tab so users can see all the transactions on an account, and improving the mail printer system.

"It is all built around the trade," Podboy says. "You have something you are not using. Let [Peerflix] play matchmaker."

At a Glance

Organization:
Peerflix

CEO:
Billy McNair

Headquarters:
Palo Alto, CA

Revenue:
Undisclosed

Competitors:
eBay, Netflix Blockbuster Online

Key Trade Titles:
Wired, Red Herring, Business 2.0, BusinessWeek, Fortune

Marcomms Team:
Dan Henig, director of marketing

Marketing Services Agencies:
Voce Communications

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