March 16, 2006

Are Video Rental Places the Betamax of the Market?

I have no idea--we don't rent movies--we generally just buy them from the sale rack at Wallyworld, but I suppose a lot of people use the places. Just not as many as used to back in the glory days before the Internets. Lileks had a riff on these stores the other day:

[...] We have one in our neighborhood, part of a small chain, and while the owners were always friendly and nice when I went there (I could bring the dog!) the place smelled of wet musty carpet, the new stuff was always sold out, and half the store was given over to VHS tapes. And since the shelves faced big broad windows, the sun had leached the color from the boxes. So you’d walk past the store and see WESTWORLD and SUPERMAN II and other hits of the VHS era propped up like tiny little tombstones for a dying medium. In any case, whatever you wanted, they didn’t have it, unless it was one of 100 popular recent movies. Would I miss it – or rather, will I miss it when it closes? Not at all. It’s irrelevant. Now. Is there a social cost to losing a local merchant? Is the cost lesser if he’s a franchisee? Is the cost greater if it’s a local chain? I suppose there’s an answer, but I’m not sure it’s a useful one – and that’s a recipe for paralysis, anyway. [...]

He had an earlier one, too:

[...] I cannot enter a video store without detecting the faint whiff of death that saturates the industry . . . .the business model seems so 1985, like selling holy precious internet access by the minute in special stores. [...]

I couldn't help but remember what he said after I saw this headline: Movie Gallery amends bank debt, will miss filing deadline for its 10-K, and read the accompanying article.

If the second biggest concern is having a hard time, it doesn't bode well for the whole model.

Posted by Terry Oglesby at March 16, 2006 01:43 PM

I haven't set foot in Blockbuster in over a year, even though I've rented just over 100 movies from them in that time. The door to door internet/mail service is much too convenient. They even send me two coupons every month for free rentals from the brick and mortar place, and it's not enough to entice me there.

I'm just old enough to remember renting for the first time from the little mom-and-pop VHS rental place in the old neighborhood pharmacy building. Things have changed a lot...

Posted by: Diane at March 16, 2006 02:09 PM

Some things are better sold when there's an actual building involved--even though online booksellers might be very popular, there is still something to do at real bookstores.

On the other hand, there is nothing at a video place that can't be done easier, quicker, more conveniently, and cheaper through the mail.

Posted by: Terry Oglesby at March 16, 2006 02:17 PM

I rent from Movie Gallery occasionally because I rent so infrequently. If I were a frequent renter, I'd use Netflix. I don't think the bricks and mortar rental stores are going to survive by catering to customers like me who spend less than $5 a month on DVD rentals.

Also, I'd like to point out the irony of how Blockbuster treats potential customers like thieves who want to steal a $15 DVD by not returning it. If I were the type who steals things, a DVD would not be on the top of my list of items to filch. However, Netflix (and Blockbuster also!) routinely trust the U.S. Postal Service to deliver discs to mailboxes all over the country. Think of the unknown hands touching that precious cargo of plastic! The horror!

Posted by: megabeth at March 16, 2006 02:24 PM

Out of curiosity, I wonder how much these folks' postal losses are each year.

Given how many they move, and the reliability of the transmission method, it's got to be a fair amount.

It might not even really matter, because the physical material of the DVD or tape itself is only worth pennies. The data on the material is what's worth something, but if it just gets lost or dropped behind some machinery, no one really misses it.

Posted by: Terry Oglesby at March 16, 2006 02:39 PM