In Cafe DVD, you can sit, order DVDs online, drink coffee and do it all in your underwear, if you like.

Online DVD rental services such as Cafe DVD, Netflix and DVD Freddie are making movie rental as easy as clicking your mouse and opening your mailbox.

The winner here is also the film enthusiast, tired of seeing the same titles at the movie rental store. While the average movie store has about 1,500 movies on its shelves, online services like Netflix have 12,000 titles from which their customers can choose, said Rick Sneed, a spokesperson for the company.

Most online movie rental services work like this: a subscriber pays a flat monthly fee, and keeps a running list of movies in the order he wants to watch them on the service’s Web site. The service mails from that list several DVDs, which have no due date. Once the subscriber is finished watching them, he mails them back to the service in a pre-paid envelope. That triggers the online service to mail the next three movies on the list to the subscriber, and so on.

Most services charge a flat monthly fee around $19 a month. The value to the consumer depends on how many movies you watch in a given month, and how much you pay in overdue fees at your local video store. At that price, online DVD makes sense for those who rent more than five movies a month at the Blockbuster price of $3.69 a movie. Blockbuster’s fee for a rental one day late is the price of the rental again.

DVDAvenue.com features a rental savings calculator on its Web site. The calculator requires you to punch in how much it costs to rent videos at your store, how many days you can keep them, what percentage of the time you return movies late and how much those late fees are.

Let’s say you rent the DVDAvenue maximum monthly amount of videos, which is 11. You pay the $19.95 monthly fee ($1.82 a movie) and no late fees. If you rent the equivalent at Blockbuster, you’ll pay $40.59 at $3.69 each. Granted, you’re not getting out much in this scenario, but the monthly savings is $20.64. The savings from online vendors climbs if you typically return movies from your local rental store late. While a minority of movie-watchers are subscribing to such services, online companies say consumers are still warming up to the idea. Netflix, the largest of the online companies with 740,000 subscribers, has nearly doubled its customers over the last year.

The Los Gatos, Calif.-based company is headed in the direction of profitability after its start-up three and a half years ago.

Netflix narrowed its losses in the third quarter to $1.7 million, or 8 cents a share, compared to a net loss of $5.6 million, or 38 cents a share, in the same quarter one year ago. The company had its initial public offering in May and has been widely watched on Wall Street. Netflix’s trend-setting method of renting DVDs is turning heads of industry leaders too. Retailers like Blockbuster and Wal-Mart have now begun testing and considering comparable services.

”It’s sort of like the tail wagging the dog,” Sneed said. ”They’re responding to the market because of the inroads we’re making into the market.”

Though the entrance of new companies into the world of online renting has raised investor concerns about future competition, Netflix isn’t sweating.

”It’s validation of the market,” Sneed said.

”It’s nice now to see the world’s largest company and the world’s largest video company get into the business.”

Netflix claims it has an initial advantage over the newcomers: multiple distribution centers around the country, according to Sneed. That means customers around the country get their orders faster.

Just last week, Blockbuster announced its acquisition of a small online rental company, Film Caddy. The company is using Film Caddy as a research and development tool for new business models, said Randy Hargrove, a spokesperson for Blockbuster.

”We still see it as a niche business,” he said. ”Video rental is an impulse activity.” Convenience is big for customers, he said. Sixty-five percent of Blockbuster video stores are within a 10-minute drive of its customers, according to Hargrove.

”You get the product and the movies when you want them,” he said. ”You’re not held back by the U.S. postal system.” Blockbuster has 48 million members, and estimates the number of online subscribers to be in the ball park of only two to three million. Still, online rental companies’ flat monthly subscription model is driving change in the way Blockbuster does business.

In addition to Film Caddy, the company has launched an in-store subscription campaign at four of its stores. The model allows customers to pay a flat monthly fee and have DVDs checked out for an unlimited period of time.

Even retail mammoth Wal-Mart has jumped on the bandwagon, launching its own DVD rental service on its Web site.

Cynthia Lin, a spokesperson for Wal-Mart, said the retail chain launched its online rental service last week. Based on industry research about the growing popularity of DVDs and players, Wal-Mart decided to expand its reach in the entertainment sector.

”We think customer response will be strong,” she said.

”Besides one-third (of households owning DVD players), all signs point to that number growing dramatically in the next few years.”

DVD player sales are expected to be gangbusters this season, the Consumer Electronics Association (CEA) reported. This year alone consumers will buy more than 16 million DVD players, according to CEA. The average price of a player is expected to drop 6 percent to $155 dollars, though major electronics chains are selling them for half that price.

Wal-Mart, for example, sells an Emerson DVD player with CD and MP3 capability for $78.83, while Circuit City advertises on its Web site Apex DVD players with MP3 capability for $56.98-plus free shipping.

The entry of Wal-Mart and Blockbuster to any market is never good news for the small retailer, but Netflix may already have under its own umbrella a large portion of the universe of those who would rent DVDs online.

”We have a very high threshold we have to get over when we convince people (to try the Netflix rental service),” Sneed said. ”Once we get them to try it, they fall in love with it.”

Lisa Rosetta can be reached at lrosetta@bendbulletin.com.