I take it this is one of those articles/lists meant to spark anger and debate, because it certainly doesn't have much merit in the field of actual facts. Yes, the two largest video chains, Blockbuster and Movie Gallery, have seen substantial downturns in business over the last few years, but do you really feel that Netflix is the reason for that? Digital downloads are almost negligible in comparison to physical rentals, so that theory goes out the window as well.

I'm not going to kid anyone and talk as if the store rental business is still at the peak it was in the early-mid nineties when you were starting to predict it's demise. But there are so many other huge factors that go into the financial situations those two companies face right now. Let's talk about the fact that Movie Gallery, a company that wasn't really in great financial shape to begin with, bought Hollywood Video and in turn, incurred a massive amount of debt, to the point where they had to declare bankruptcy. Blu-Ray and digital downloads had nothing to do with it; it was a poor decision made by the company in an effort to thwart an eventual Blockbuster purchase of Hollywood.

As far as Big Blue itself is concerned, I would imagine that the majority of customers were thrilled over "The End of Late Fees" policy the company instituted a few years ago; it's truly as customer friendly of an idea as there could be in the business. Unfortunately, it's not business friendly, as almost immediately profits started falling due to the combined losses of not collecting late fees and product staying off the shelves longer, and thus not turning multiple times, due to the new policy.

Also take into consideration that it's apparently Blockbuster's intention to go out of business in the brick'n'mortar sense, as they have all but completely focused on Blockbuster Online/Total Access in order to shut out it's biggest threat, Netflix. They are essentially telling their customers "We don't want you in the stores, we want you at your computer" which is naturally going to affect things. Big losses are bound to occur in any medium, from sports to white collar business, when your business model isn't to win, but to beat your opponent. Trust me, they're two different things.

Your article also doesn't mention Family Video, the world's largest privately owned video chain. They are experiencing record growth, with a business plan to double the number of stores they currently have (over 500) over the next five years. All it takes is a sound business model that commits you to the business at hand as opposed to trying to be "me-first" at everything.

As a final minor issue here, it's one thing to say the video store business will go out of business in five years, quite another to say it will happen someday. Claiming that a medium of entertainment is eventually going to be replaced as technology and society advances is not a prediction; it's a fact. But putting an actual timeframe on your prediction carries with it the possibility of being wrong and looking foolish, so instead you use the comical line of "I will eventually be right." I look forward to your victory article if it turns out that the video business dies after another 20 years.

Reply

Who cares what happens to Blockbuster or Hollywood Video anyway? These two rental chains carry mostly bland, boring family
safe titles at over-priced rates. I live in the Los Angeles, CA area and I can find the titles I dig at Video Journeys or Mondo Video A-Go
Go. 'sides.......isn't Blockbuster Video owned by Mormons?

Reply

what do you mean movie gallery closed up shop??theyre still in business i work there! lol

Reply

As a guy who gets cabin fever relatively easily, I'm personally worried that everyone else's desire to never leave their home is going to eventually turn me into an insane person as business after business begins to crumble and I lose more and more excuses to get out.

Plus...what the hell are kids going to do for jobs outside of being a waiter once all the brick-and-mortar shops vanish? It's not like those who were able to work at a customer service job selling people books will necessarily be able to do something when that same shop becomes a website.

Reply

Movie Gallery has not closed. So already this article is discredited. Chris above is right, there are other factors that have affected business (like location). All that said, Blockbuster posted 80 million in profits (anybody want 80 million?) in the first quarter and now we are coming out with a plan of kiosks and machines in that you can come in and download a movie straight to your machine and take it home and immediately watch it on your tv (that means what you want will always be available at your convenience). Think that Blockbuster is going away anytime soon? You may be making a visit there sooner than you think.

Reply

I work at Movie Gallery too, and while it's not the best place in the world to work it's NOT shut down lol.

Reply

Yes, Movie Gallery is still business. I am surprised that it is though. I was in the video rental business for ten years, ending in 1994. For that ten year period it was a goldmine. We sold our chain to Movie Gallery in 1994, when they were cruising the country in company jets snapping up every chain that they could strike a deal with.

I've been out of industry for quite awhile now, but I do know what made the numbers work back when it was a good business model. That formula can't work, except in rare cases today.

One can't make a seriously go in this business without one or both of two things. Either volume, focusing on new releases. Or two, a focus on catalogue product with video that has recouped its initial costs.... I don't see that happening anywhere in the country today, except in isloated cases.

Main probem with video rental today is not competing technologies. Its the cheapening of the product. VHS isn't worth selling a garage sales or on eBay. DVD's only a few years old can be bought new in original shrinkwrap for five dollars at WalMart. Video rental stores still have the new releases, but if people are picking up movies they haven't seen from other venues for anywhere from pennies to the cost of a rental, that's going to make a trip to the video store much less inviting.

I do a lot of traveling. I don't see a lot of mom and pop video stores. Simple reason is that its almost impossible to make meaningful money with one.

Regarding kiosks, the article is predicting the death of the video rental store. I think kiosks with packaged product will be around for awhile. Downloaded product might be a viable model, for awhile. Both will be very vulnerable to new technolgy and it wouldn't be where I would put my money.

Reply

Movie Gallery has not closed. I work for Hollywood Video, and we're still standing. Just because they closed down a few stores does not mean they're out fo the video picture. If anything, the company is doing well now, especially since it's being run like a corporation, instead of some small-time business. Go Gabe!

Reply

I work for TLA VIDEO in Philadelphia. Plenty of customers ask if Netflix is hurting our business or if we're going out of business in general. I say no to both because we're open 10am-12am everyday of the year and that allows people to stop in anytime and rent a movie when they want it. Customers can also quickly pick up a rental for a school assignment, or to show in bar that evening (which you can not do with mail order or digital downloads), or if they just really have the urge to watch some 80's coming of age comedy. Maybe they won't be in the mood for that type of film after waiting a couple days for it to arrive in the mail. And because we sell used dvd's we're not stuck with 30 copies of Norbit or Darjeeling Limited, we're able to make room for the new titles and keep room for the old out of print ones. If a title is not on dvd we have the VHS copy and plenty of people are asking for them. We're starting to get Blu-Ray but it's still too early for it to be the standard for most of our customers. We are also involved with several Philadelphia film festivals and have plenty of online customers. See http://www.tlavideo.com for more. Thanks.

Reply

The Blockbuster in my town continues to do very well. While not as busy as the pre-Netflix days, it still continues to be busy more often than not. Often there are people there swapping out their online rentals, while at the same time picking up 2-3 more movies. That, IMHO, is one of the things Blockbuster is trying to do. You go swap out your one free online rental, but end up getting 2-3 movies more, renting a game, or buying a PV movie.

Blockbuster also is heavily promoting its in-store version of Total Access. Right now it is just 1 or 2 out at a time, but what they are doing with the plan is allowing you to take BOTH movies and games on the same plan. If they had a 3 out plan and offered it at a competitive rate, they would have a sure winner in my book. As it stands to take 3 out you need to sign up for BOTH a 1 out and a 2 out plan -- over $50 for that. If they dropped it down to say $39.99, for a 3-out combo of games/movies, they have done a one-up on Netflix, basically offering a 2-out movie plan/1-out game plan or a 2-out game plan/1-out movie plan for just a fraction of the price more than a combined Netflix/Gamefly plan.

The beauty of in-store Total Access is that you get to pick the movies, you do not have to wait for them, and you can easily cycle through several returns a day (yes, there are a number of customers who will show up at 10 a.m., watch their two movies, than return them later in the afternoon, rent two more and watch those ... some even returning to the store a THIRD time). Basically, in two days you can pay for the plan. I usually rent more through the in-store plan than the mail plan, which likely is why there is a higher pricing point.

It really is premature to announce the death of the brick&mortar video store. Wal-Mart, Kmart, and Target are still standing, despite Amazon.com pretty much being the Internet store than sells everything they do (and at a lower price). Face it, shopping on the Internet just isn't the same. Sure, I shop online all the time, but often will feel for things at Wally World first (and of course, spend money in the process).

Hollywood Video's troubles really have to do with not trying to keep up with the times soon enough. They were the first out of the gate in online rentals, when they snapped up Reel.com, which mailed out VHS tapes. But, that was too impractical. They did not jump on the online DVD bandwagon, which really could have been a boon. Imagine had Hollywood bought out Netflix before Blockbuster started Total Access. That said, the Hollywood Video here still does quite well. In fact there continue to be two stores, despite rumors that one would close. One of the stores has the distinct advantage of being the only game on that side of town (the older store actually is just a few blocks from Blockbuster).

The thing is, there still are a wide number of Americans still on dial-up. I forgot the numbers, but it was pretty amazing. It wasn't just because people don't have access. AT&T is even putting DSL out in more rural areas now. It's available, but most people seem content with $10/month dial-up. Simply put, there are those who do not want to deal with the Internet for movie rentals and Blockbuster fills that segment.

My guess is that you might see one of the major players go down and my guess is Blockbuster will beat Hollywood. They already are offering huge incentives at the local Blockbuster to any customer who brings in their Hollywood Video card to be cut up (a stack of free rentals IIRC). And, Blockbuster appears to be trying to innovate fresh ideas as much as possible. By combining their by mail with in-store membership, coupled with the forthcoming changes to Movielink, Blockbuster stands to be a good foe for Netflix.

Moral of the story -- Blockbuster is staying put for now.

Reply

"Just because they closed down a few stores does not mean they're out fo the video picture." Re Movie Gallery

I wouldn't call a thousand stores, a few.... Neither would I think that bankruptcy protection and delisting from NASDAQ is representative of a healthy company.

Fact of the matter is that bricks and mortar video rental is a dinosaur. I think its sad, but nonetheless there are not enough people left who want to make a trip to the store to rent and another one to return. The billion $ purchase of troubled Hollywood Video was a desparate attempt to save a failing business, as was the attempted merger of troubled Circuit City with Blockbuster. The millions of profit that Blockbuster enjoyed first quarter, much of it came from cost cutting - which makes me wonder if much of it was at the expense of future health.

I have no doubt that video rental employees stay busy on Friday nights and Saturdays. That is no indication of health. It takes A LOT of rentals to pay the overhead. Popcorn and cotton candy don't help.

Reply

well beth, i would hope that before you put your next article out for print for all to see you should check your facts. movie gallery is indeed still in the video business with over 3000 operating stores, i am an employee in one of those stores and take offense to your remarks.

Reply

As the owner of a small video store chain I am happy to report that our numbers year to date are UP.

I believe that any announcement of my passing is just a little premature.

Will we last forever? No. But our industry has a longer life span projection than many give it credit for if one uses good business fundamentals and is located in the right demographic areas.

Reply

I too worked for Movie Gallery in Charleston SC. It was a nice place to work especially since it was a pt second job. The company is in finacialy strife but it is not just Netflix that is hurting the industry. Most people now have either digital cable or satelite that offers movies as well. For the price of a store rental you can also rent a movie from your cable tv provider. The big benifit to this is no more going to the video store only to find the movie you wanted is all rented out. Also with the rising gas prices many people have opted to shop at home. Still I found many people who simply loved coming to the store for the "thrill of the hunt". I also knew a lot of customers who depended on store personel to help guide them to a good movie. The industry is down but will survive.

Reply

Tell the entire story. BLockbuster online is so much better than netflix it is rediculous. We had netflix and the movies got lost in the mail, we had a hard time getting them ontime and they often sent the wrong movies.
Blockbuster is GREAT! Movies come and go quickly, no hassles, and it is cheaper where we live.Blockbuster RULES!

Reply

Think some might have strayed from the premise of the article: the neighborhood video store is on the verge of vanshing. Blockbuster Online and kiosks are not video stores.

Reply

NET FLIX CAN YOU SAY SCRATCH DVDS?

Reply

What about the redbox? I live in San Antone and everyone I know uses this and goes to the movie store to supplement.

Reply

I'M A NETFLIX SUBSCRIBER. HERE'S WHY! 1: IT NEVER CLOSES ( online or live operator help is readily availible ) IT'S SIMPLE AND EASY TO USE, . 2: IT HAS OVER 10,000 ONLINE STREAMING VIDEOS/MOVIES (wth more titles being daily)INSTANTLY AVAILIBLE. 3: THESE MOVIES DO NOT HAVE TO BE DOWNLOADED TO BE VIEWED. 4: THEY ARE AVAILIBLE IN LESS THAN 20 SECONDS FOR VIEWING.5: THEY CAN BE VIEWED REPEATEDLY, STOPED AND STARTED, WITH NO TIME LIMIT FOR VIEWING, OR ADDITIONAL COST. 6: THEY HAVE OVER 8 MILLION ( YES, THAT'S RIGHT...8 MILLION!!!!!)TITLES AVAILIBLE FOR DVD SNAIL MAIL RENTAL(with out late fees...and usually arrived in 48hrs of ordering). AS FOR SCRATCHED DVD'S....A LITTLE DISH SOAP USUALLY TAKES CARE OF THE PROBLEM. JUST BE SURE TO RINSE AND DRY THOURGHLY THE DVD BEFORE USING. 7: THEY ALSO HAVE MANY TITLES AVAILIBLE IN BLUE-RAY FORMAT. 8: IF YOUR TELEVISION / MULTI-MEDIA ENTERTAINMENT CENTER IS HOOKED-UP TO YOUR COMPUTOR YOU MAY VIEW THE VIDEO/MOVIE THAT WAY; I'VE NOTICED NO DISTORTION. 9: THEY ALSO HAVE A VEW DEVICE FOR A ONE-TIME FEE WHICH MAKES VIEWING ON TV EVEN EASIER. 10: THIS NEW DEVICE FREES UP YOUR COMPUTOR'S PROCESSING AND MEMORY FOR OTHER TASKS AND USES (it comes with it's own remote...you need to have titles in your instant "QEUE"). 11: DEPENDING ON YOUR SERVICE PROVIDER'S BAND WITH, AND YOUR COMPUTOR'S MEMORY; YOU MAY EVEN WATCH A "STREAMED VIDEO/MOVIE" IN ONE BROWSER: WHILE DOING OTHER TASKS IN ANOTHER BROWSER. I DO THAT MOST OFTEN. I AM EVEN ABLE TO RUN COMPLICATED PROGRAMS AT THE SAME TIME (ie: memory users like online :GAMES PROGRAMS) 12: THE PRICE IS UNBEATABLE. YOU COUPLE THAT WITH "HULU.COM" (WHICH PROVIDES CURRENT AND CLASSIC TV SHOWS AND MOVIES FOR VIEWING FOR FREE!!!!!) I BELIEVE THAT BLOCKBUSTER AND YOUR LOCAL CABLE COMPANY HAVE MUCH TO WIORRY ABOUT!!!!!

Reply