coreflix.com

My co-founder and I, Ben Padnos, along with another co-founder, started coreflix.com (www.coreflix.com) in late 2002 as an internet based DVD rental service for Action Sports (Surf, Skate, Snow, etc.). Learning from my last company, NetFreight, I had conceptualized this business to fit into the disruptive framework.

A little background on the Action Sports DVD industry.

1. There are no theatrical releases for the DVDs.
2. The DVDs are not available for rent at Blockbuster, Hollywood Video, Netflix, etc.
3. The DVDs retail for $24.95 to $34.95, are typically 40 minutes long and have to be purchased sight unseen.

So, we felt there was a good sized population of customers who would love to have a $17.95/month "all you can eat" (flat fee) rental service. (I believe that rental as a business is almost inherently disruptive because you are enabling a larger population of folks who either cannot afford to buy or don't use the product enough to buy it the opportunity to use it). Users would select DVDs through our website and we would use the USPS to mail them out in 2 way mailers.

Well we were right, we acquired hundreds of customers soon after launching and we get comments every day from our customers, telling us how much they love having an alternative to the old way of consuming these DVDs:

"Thanks Ben,

You guys are great to deal with. Coreflix has been a great way to find out which DVDs are cool and which ones suck, without spending a ton of $$$$.


-Eric"


The "Disruption" framework showed the way:

1. We targeted and enabled a population of consumers who previously didn't have the money or value this content enough to purchase it.
2. We gave them a simple, web based ordering process and used the USPS for fulfillment (customers were willing to accept the delayed gratification of receiving the product because they had no other alternative).
3. We helped them to more easily and effectively do something they were already trying to do - view a lot of action sports DVDS.

We also picked a niche that was not of interest to the major DVD outlets (asymetry).

Predictably, the "industry" (DVD producers) were mad at us and made all sorts of legal threats (all of which were basically hot air due to well established copyright doctrine). We believe, and tried to relate to them that a rental service was a way that the industry as a whole could gain more customers, by increasing the numbers of viewers of their product. There will always be more casual viewers who would rent but would not buy sight unseen (and so were not current customers), as compared to the "hard core" fan that purchases, and from which the industry currently makes its living. Fortunately (and critical to a disruptive business model) we didn't need their permission nor cooperation. Hopefully they will hopefully come around to our point of view, realize that this is good for the industry and help us promote the service.

Now we are trying to figure out how to grow the business beyond the die-hard action sports fan and get the more casual consumer. Stay tuned.