Zip.ca executive: Netflix is going to expand our market

As reported earlier today, Netflix has launched its online streaming service in Canada. 

You would think that this market-entry would be cause for concern for Zip.ca, Canada's largest DVD rent-by-mail service. However, it doesn't really seem to bother them. Rob Hall, chief executive of Momentous.ca Corp. - the parent company of Zip.ca - put it this way:

"There's all this buzz about Netflix coming to Canada, but Netflix isn't really coming to Canada. Netflix is bringing a limited streaming offering to Canada, not their mail business, which is what they're built on...They're going to help us educate the market about why brick and mortar is dying in the U.S. and why it will follow suit here in Canada, and we're the only game in Canada right now for mail."

Hall does have a point. Netflix is not bringing its bread-and-butter rent-by-mail service north of the US border, which would compete head-on with Zip.ca's market offering. That's not to say that Netflix won't chip away at Zip.ca's revenues as users become more familiar with on-demand streaming service, which is likely why Zip.ca is planning to launch its own online streaming service later this year along with a specialty video kiosk business, which will allow users to rent movies from an automated vending machine inside grocery stores for $1 per night.

With the well documented struggles of the brick and mortar video rental model, which took another hit this week with reports that Blockbuster is filing for Chapter 11 in the States, it is becoming increasingly clear that Canadians will have to look elsewhere for their video rental needs, and competition within this space is great news for all.