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CustomFlix Spans Online, Physical Retailing

9 May, 2006 By: Jessica Wolf

CustomFlix has been in the DVD-on-demand business for more than three years, but is enjoying a heightened profile.

The company — which as of July 2005 is wholly owned by Amazon.com — recently inked deals with such major suppliers as NBC Universal, A&E Home Video and Public Broadcasting Service (PBS) to craft DVDs of programming for Amazon.com shoppers to purchase.

“There are more changes going on in the current year than has happened in the last 10 years,” said Darren Giles, chief technologist for CustomFlix.

He calls CustomFlix a kind of hybrid of the broad, specialized, shelf-space-free content digital downloading can provide, and the still-strong physical product market.

“I think downloading is going to be a hugely important thing,” he said. “But while the industry really experiments with it, there's going to be a need for packaged product for a little while.”

From a consumer's perspective, CustomFlix is a completely blind service. A shopper doesn't know, when he or she purchases a title through Amazon, that it's being manufactured via CustomFlix's unique DVD-on-demand service. They just know they are getting the content they want, Giles said.

It would take a very well-trained eye to tell the difference between a CustomFlix-produced, on-demand DVD and a traditionally manufactured disc.

The packaging is the same and the titles come in Amaray-style cases, just like mass-replicated DVD.

The benefits lie in the cost. CustomFlix cuts out the costly mass-manufacturing step for content holders, customizing content that otherwise may not fit into a traditional DVD release market, he said.

For example, under CustomFlix's deal with NBC Universal, Amazon shoppers will be able to buy segments from the “Today” show and the network's recent “Westminster Dog Show” coverage. CustomFlix and Amazon also have upcoming offerings of PBS programs like “American Experience,” “Antiques Roadshow,” “Frontline” and “Nova.”

The site already has 1,000 A&E titles for sale, including History Channel and Biography Channel programs.

Impression-sensitive, timely or quick-hit programming like this is well-suited to a turnaround DVD service, Giles said.

It was important for CustomFlix to support any and all high-definition formats, he said. The company recently announced it will be able to produce HD DVDs, Blu-ray Discs, Windows Media Video High-Definition DVD (WMV-HD DVD) and any other high-definition format.

CustomFlix also is working with Mark Cuban's HDNet, a national network that broadcasts all content in high def.

Amazon and HDNet will work together to digitize hundreds of titles for sale on Amazon.com, the first of which will be in the WMV-HD DVD format with Blu-ray and HD DVD technology to follow.

These are all evolutionary steps for the company, Giles said.

CustomFlix already does a strong business in producing DVDs for sale via 800 numbers that pop up after TV programs, managing those transactions for the rights holders.

It's also a great service for independent filmmakers, Giles said, helping them find an audience for their very personal projects.

“It personally frustrates me how many millions of hours of content are out there that people just sweated blood for,” he said. “More than 90% of content ever shown at film festivals disappears from the face of the Earth a year later.”

Anyone with content, aside from porn, can use CustomFlix with a simple “order here” link on his or her Web site, a connection to Amazon.com or via an 800 number linked to CustomFlix.

For $49.95 per title, CustomFlix will load the original tape master (provided by the rights holder) into the company's archive.

When orders come in, Customflix makes the DVDs. The content owner sets the price of the DVD.

CustomFlix manages the whole transaction, keeps around $5 to $8 per sale and sends content providers a monthly statement with a check for the rest.

“Because there's no inventory, we never underestimate or overestimate demand,” he said.Being a part of Amazon.com is a good fit for the growing company Giles said.

“Ultimately, Amazon's one goal in life is to be the world's biggest store, with the world's largest selection,” he said.

CustomFlix helps allow the e-tailer to do that, and, in turn, the content participants benefit from Amazon's strong search and recommendation functions, Giles said.

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