ST. PAUL, Minn. – Oliver Ross was in line at Blockbuster, waiting to fork over big bucks, when he had an epiphany.

“I got hosed with late fees. I had to pay 18 bucks for one movie because it had a bunch of late fees on it. Eighteen bucks for one movie,” says Ross, 22, of St. Paul. So, last December, he decided to try the rent-by-mail service Netflix.

The Aakre family of Hastings, Minn., answered their movie-rental wake-up call while eyeing the family budget. “When we put together what we were spending as a family, we were paying so much in late charges that it was actually more economical to use Netflix,” says Tracey Aakre, 38.

Netflix is the big cheese in a relatively new service category: companies that essentially replace video stores by letting customers rent by mail. And it’s not just for agoraphobes; Netflix has 2 million subscribers.

Customers pay a monthly fee; the amount depends on how many movies they choose to rent at a pop (most get three per shipment for $21.99, which includes shipping) and, for that fee, they can rent as many movies per month as they like – and hang on to them as long as they like. To request films, customers simply place titles in an online “queue,” a list of movies they want to receive, and the films are mailed to them in roughly that order.

“We’re in every state, in 3,000 cities,” says Shannon Clouston, senior manager of corporate communications for Netflix. The service is most popular in the San Francisco area, where the company is based and where 7 percent of households are subscribers.

Blockbuster has taken notice of all those customers having epiphanies in their stores. Last month, the video giant announced a new online service to compete with Netflix, along with online services offered by Wal-Mart and Cleanfilms, which rents controversial “cleaned-up” versions of popular films, with sex, violence and language expunged.

In addition, such companies as Docurama, Film Movement and Spiritual Cinema Circle send their subscribers specific types of films each month. Docurama offers documentaries (which, incidentally, can also be rented through an exclusive deal with Netflix); Spiritual Cinema offers faith-based films; Film Movement is structured like the Book-of-the-Month Club, sending subscribers a new, exclusive independent film each month.

“The difference between what we’re doing and what Netflix is doing is we acquire all the rights to our films,” says Larry Meistrich, founder of Film Movement. “I think people like to actually own something, and the films we send them every month have all been in prestigious film festivals. We’re trying to prove that you don’t have to live in lower Manhattan to have a good-quality arthouse near you, that you can live in a suburb or a lake house in rural Minnesota and stay culturally connected.”

Some of the specialized services offer films that were never released in many markets, and some of the more obscure Docurama titles, for instance, are tough to find. Cathy Berg, 51, of South St. Paul, belongs to a discussion group that has watched DVDs with faith-based themes from Spiritual Cinema Circle – DVDs that, as far as she knows, can’t be found anywhere else. “It fills a niche. I wish those movies were available all over the place.”

Spiritual Cinema has 49 customers in the Twin Cities and, although Film Movement founder Meistrich won’t talk numbers, he says his business is growing.

But Netflix, which recommends movies to customers, based on the preferences they express in surveys and rentals, is way out in front in the don’t-even-have-to-leave-your-computer-to-get-a-movie business. With more than 25,000 films in its library, its share of the online rental market is 95 percent.

Ross says they deserve to be out in front: “I’m pleased with the selection. A lot of the foreign and independent films that I’ve been interested in, they have. I’ve even lost two movies and they were cool about that. And they have this algorithm that is supposed to figure out what you might like, and it’s been pretty right on for me.”

In fact, Ross says the last good movie he saw was a recommendation from Netflix, Charlie Chaplin’s “Modern Times.” “I guess that’s the biggest surprise, that I have been able to get hold of some movies I would otherwise have missed, because of the recommendations Netflix made.”

Convenience has been the biggest factor for the Aakre family, which often found themselves trudging to the video store to gaze at vast, empty shelves of the new releases they wanted and couldn’t have. In contrast, Tracey Aakre says getting mail from Netflix has become an eagerly anticipated event.

“The kids are really excited about it. They’re always ready to get the mail,” Aakre says. “We’ve sort of learned how to plan our weekend around it. Usually, by Monday, we’ve seen the movies and we’re ready to put them back in the mail and start planning what we’re going to watch next weekend.”

The Aakres have turned managing their queue into an art form, shifting things around a couple weeks ago so they could get a brand-new release, “The Passion of the Christ,” in addition to two others that had been at the top of their queue, “Matchstick Men” and “13 Going on 30.” The Aakres generally have about 20 movies on their list at a time.

“The queue is really just a list. You can move it around. You should probably always manage it so you know that you have the right three movies coming next,” says Clouston, since the top three movies on a subscriber’s list are the next movies they will receive. Subscribers get an e-mail notification when new titles are on the way and they usually arrive in one or two days.

With 150 titles in his queue (the Netflix record is 10,000), Ross says the queue is a great way to avoid that stuck-in-the-video-store-and-you-can’t-remember-the-titles-of-the-stuff -you-wanted-to-see syndrome. If you think of a movie that interests you, even if it’s still in theaters and not yet available on video, just stick it on your queue and eventually it’ll find its way into your next three titles.

“Like, I went on an (Akira) Kurosawa kick, and I watched all of his films,” says Ross, who adds that he now ends up watching “a lot” more movies than when he relied on the video store. Both he and the Aakres say they have no problem watching 20 or so films a month. With their $21.99 monthly fee, those movies cost them about a buck apiece.

Still, money isn’t everything, argues Tod Herskovitz, co-owner of St. Paul’s Box Office Video. “I take a dim view of services like that, especially for people who live in a city with the resources that we have,” says Herskovitz. “We have customers who still come into the store, even though they are Netflix subscribers, because you can’t always get what you want. Renting videos can be an impulsive purchase. You can’t always wait for a title to come up in your queue.”

“You do miss out on the instant gratification,” agrees Ross, who also says he occasionally misses “the social aspect. It’s kind of fun to pick out movies with a female.”

Interacting with a computer simply doesn’t give you the warm fuzzies of an actual, breathing person who can help you figure out what you might like by actually talking to you.

“I know they have that program to make recommendations, but I find that to be a little ridiculous,” Herskovitz says. “I can say, “What kind of mood are you in?’ and if the customer says, “I’m in a dark kind of mood,’ I can say, “Perfect. I bet you’ll like this.’ Or, “Oh, you like Michael Haneke? Maybe you’ll like Werner Herzog, then.’ And I doubt if Netflix even has, for instance, Haneke’s “The Seventh Continent.’ “

He’s right. Netflix doesn’t have that one, although it does have the power to get behind a more mainstream independent film and make it huge. Last month, for instance, an astonishing 15 percent of Netflix shipments included the title “The Whale Rider.”

But Herskovitz’s biggest beef with Netflix is that it prevents movie lovers from supporting local businesses. “All Netflix customers are doing is exporting their money to wherever Netflix is based. That’s always my feeling about why it’s important to support local businesses,” Herskovitz says.

Ross has a different problem with Netflix, one that has nothing to do with convenience, selection or supporting local businesses. His tiny suggestion for Netflix concerns his belly. “I really do like Netflix,” Ross says. “But it would be nice if they sent you some Sour Patch Kids once in a while.”

NETFLIX

What is it? An online video store. You pay a monthly fee that depends on how many movies you’d like to rent at once ($21.99, including shipping, gets you three at a time). For that monthly fee, you can rent as many movies as you like.

More information: 1-800-585-5131 or www.netflix.com

BLOCKBUSTER ONLINE

What is it? Blockbuster titles, available from your computer. Same set-up as Netflix, but the cost is $19.99.

More information: 866-692-2789 or www.blockbuster.com

DOCURAMA

What is it? Large selection of hard-to-find documentaries for purchase online (Docurama titles are available for rent through Netflix). Prices are per-film, generally about $25.

More information: 1-800-314-8822 or www.docurama.com

FILM MOVEMENT

What is it? Much like the Book-of-the-Month Club, it’s a service that sends you one preselected title a month for $19.95. Film Movement titles are generally foreign and independent films that played the film festival circuit but did not get wide distribution and are not available anywhere else.

More information: 1-866-937-3456 or www.filmmovement.com

SPIRITUAL CINEMA CIRCLE

What is it? Offers preselected, faith-based specialized titles for sale. Members get three to five selections per month for $29, plus shipping.

More information: 1-800-280-8290 or www.spiritualcinemacircle.com