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Case Study: Rent-to-Know
Posted Apr 12, 2004 Print Version     Page 1of 2 next »
  

Renting, rather than buying, DVDs is hardly a new phenomenon. Blockbuster and Hollywood Video have been renting DVDs to their in-store customers for several years now, and companies like Netflix are rapidly gaining consumer acceptance by making such rentals possible online. All you have to do is sign up and make your selections via the Web, wait for the DVDs to arrive in the mail, watch them at your leisure, and return them to receive your next batch of preselected titles.

The catch for consumers seeking educational titles is that the majority of DVDs available to rent are "movies". Parents who wish to use the DVD medium to teach their children in a broad spectrum of subjects have had few options available to them. Until recently, that is.

In September 2002, a family upstart known as Classroom Visuals was incorporated as Mentura, a Santa Rosa, California-based educational DVD consolidator and rental service provider that today gives customers access to 30,000 copies of more than 3,000 educational, edutainment, and family-themed titles. The company's business model employs the same rental strategy that made Netflix a 2002 Web favorite of both Time and Forbes. The difference, says CEO Lloyd Chartrand, lies in the depth of Mentura's services and the "rich legacy" it continues to nurture.

Learning Begins at Home
"Classroom Visuals was founded in 1998 and sprang from family adversity," Chartrand explains. "The son of the company's founder suffers from multiple learning disabilities—including an inability to read, write, and speak—but he would closely watch television and interact with the characters he saw. Not wanting their child to be brought up watching commercial television, the family began acquiring educational and family-friendly videos for their son to view at home. Soon, the VHS library consisted of several hundred titles. It was at this point that Classroom Visuals began renting the library's contents on a subscription basis to educational institutions and families.

"Classroom Visuals grew quickly, but mailing VHS tapes proved to be difficult and expensive," he continues. "It was during this time that DVD was first introduced to the marketplace and has since come to enjoy the fastest adoption rate of any technology in history." The company soon realized that DVD would eventually supplant VHS as America's preferred home entertainment medium.

"Mentura is the successor to Classroom Visuals and carries on the company's tradition" of entertaining and educating children at home, Chartrand adds. It's a tradition that has driven much of Mentura's success thus far, thanks to the steady growth of homeschooling—one of its key vertical markets.

"Approximately 2.5 million children are being homeschooled in the United States, and that number is growing in excess of 20 percent annually," he explains. "The composition of the families which homeschool has changed in recent years from [primarily] parents who were unhappy with the public school systems' lack of religious-based teaching to include a substantial percentage of parents who are college educated and upper middle class. These families choose homeschooling because they are unhappy with the public education system, not for religious reasons."

ABCs and 1-2-3s
With the needs of this market—and others—in mind, Mentura executives have assembled a library of titles covering dozens of subjects (including history, languages, mathematics, and science) that appeal to audiences at the preschool, grade school, middle school, high school, and college level. (Titles appropriate for infants and toddlers also are available.)

The catalog even includes programming from leading educational resources such as National Geographic, PBS, the History Channel, the Learning Channel, IMAX, the Discovery Channel, BBC, and A&E. The goal, says Chartrand, is to provide parents with single-source access to a multi-million-dollar educational DVD library for less than $1 a day.

"Mentura is constantly searching for new content and maintains a matrix of titles [organized by] subject matter, genre, and age preference," he explains. "We have developed a sophisticated library-analysis program, which tells us which subject or genre requires additional titles. Our content department then searches our established suppliers to determine whether they carry the required content. If a premium supplier carries such content, we will perform a brief review of the content and place the title into our library. If the title is acquired from a new or unknown source, we view it [in its entirety] to determine whether it meets our standards for quality before approving it for inclusion in our library."

Of special interest to Mentura subscribers are the company's customized Learning Guides, which may be downloaded at no charge from the Mentura Web site. Designed to engage children and help them explore the concepts of a disc beyond what they see onscreen, the Learning Guides include hands-on activities, discussion questions, Web links, and references for additional learning. Credentialed educators under contract with the company typically write the guides, which accompany the service's most popular titles, in about 30 days.

The process of developing these guides is a source of great pride for Mentura. "We select the DVDs for Learning Guide authoring usually in batches of 100 or more," Chartrand explains. "The DVDs are then shipped to a coordinator, who subsequently distributes the DVDs to the authors based on their areas of knowledge. The authors view the title and draft the Learning Guide following our standard format. The draft Learning Guides are then returned to the coordinator for proofing before they are forwarded to Mentura, where we perform our final review before adding them to the site. Mentura owns all rights to the Learning Guides and has filed for a patent to protect the business process of downloading the guides in association with a DVD subscription service."

Like Netflix, Mentura's business model enables quick and easy access to titles. Customers may purchase monthly subscriptions ($19.97/month) to rent three DVDs at a time or annual subscriptions priced at $199.97 (three DVDs at a time), $299.97 (six DVDs), or $499.97 (10 DVDs). Customers receive their rentals via first-class mail within two to four days of placing an order and may keep a DVD for as long as they'd like. Once they finish with one title, they can send it back in a prepaid return envelope to receive the next title in their queue. Shipping and handling is included in the subscription price, and there are never any late fees.

Mentura also runs periodic promotions to drive annual membership. The latest promotion shipped free Daewoo DVDP480 progressive-scan DVD players to new subscribers who signed up for 10 titles a month. To date, the company has shipped more than 2,000 players and will continue to employ the strategy from time to time as a value-added benefit of membership.

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