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Ken Houghton

"What’s more, I don’t understand why video stores weren’t wiped out by any of those alternative delivery systems before the rise of Netflix or why video stores, which post-date cable, came into existence to begin with.

Maybe they were too busy ganging up together to close all the movie theaters."

It's not Netflix that destroyed the video stores, any more than video stores destroyed theatrical releases for films.

The business model changed: instead of getting all of your money back upfront--or not--you could sell copies to video stores. (Remember the old prices on videos? I remember thinking about paying $100 for the LaserDisc of Fantasia [I was single then], and that VHS tapes would go "on sale" for $25-30. That created the demand for rental stores.)

Then the studios realised--thanks to the Japanese, and what they did with Columbia--that they could make money from their back catalog as well. And videos were offered with "rent to own" pricing.

That's the point at which video stores needed to change their model. If I have to spend $98 to buy The Conversation, I would probably choose to rent it for $4-5/day instead. (Prices are historic, youngsters. Talking the Tower Superstore at Lincoln Center.)

But if the video store is buying two dozen copies of The Latest Release--which affects the presale that made that film worth making, even if the box office was going to be maybe 1/2 to 2/3 of the people from ten years before--it's going to have 20-22 copies taking up space a few months later. And that's if their lucky. (How many people go into a video store, or on to their Netflix queue, saying "Gee, I really feel like watching A View from the Top tonight?")

And the space that was needed to accommodate stock that had a reasonable turnover became dead space and "previously-viewed" sales.

You can see where this is going. The tradeoff ultimately becomes the "browsing effect" against the "you may also like" algorithm. The results are different--if I'm looking for the greatest movie of all time, I won't get a Zardoz "recommendation" from Netflix--but probably not enough that it makes the rental of the floor space worthwhile.

Full disclosure: one of my cousins owns a video rental store in suburban Philadelphia. It's the only video store I've ever understood--packed with videos, very little walking room; by default, a series of "You May Also Like..."s that appeal to the Impulse rental more than the "What's New this Week" crowd. Primarily offering things that everyone else does means you either compete mainly on price or provide extra services. Since video store can't stay open 24/7, or offer both pick-up and delivery, without covering that cost as well, "competing" becomes "catering to impulse and loyal customers." Blockbuster never did that. Small stores that depend on foot traffic get hit by VOD and their desire to not appear intimidating. Landlords decide that a nail salon or other relatively high-margin business would pay more rent.

The rest is lost the dust of history, like the orphaned VHS tapes that will never be released on Disc of some type.

Ken Muldrew

Ken, your cousin's video store sounds just like my little brother's (if you're ever in Edmonton, check out Sneak Preview). And many of the clerks (but not all) could compare Antonini or Bergman films until the cows come home. Not to say that they're movie snobs; like Ebert, they are mostly just people who like watching movies. Alas, the rent keeps going up but the returns aren't keeping pace. He's still getting by, but it can't last much longer.


All due respect, Lance, but the video store model was pretty stupid to begin with.

Think about how many DVD's you can pack onto a shelf in your house. Maybe 50 per shelf, and that's allowing for space at the ends to expand.

Now think of the couple of hundred DVDs, even a couple of thousand in the bigger Blockbusters. In other words, your entire Blockbuster store fit on your shelf.

The rental videos were never the profit center for Blockbuster mostly because they couldn't be. Where BB made its meager profits were in the sales of DVDs and snacks.

So what really killed the video store (like video killed the radio star)?

The pay-per-movie and the DVR. See, Netflix doesn't get DVDs until after a) the theatrical run and b) the movie spends a month on cable PPV. Neither does Blockbuster.

They used to because cable companies could only program PPVs for set times. They could multiplex the signal and stagger different channels, but that became a bandwidth issue as more customers started using cable for the internet.

Comes the DVR. Now, you could order a movie at 2AM when traffic was slow, and have it waiting for your Saturday morning viewing pleasure.

It's hard to blame Netflix when the cable companies stole movies and technological advantage from both. That's like blaming the Mets for losing the Phillies the World Series, when the Giants beat them to get there.



"In other words, your entire Blockbuster store fit on your shelf."

Should read "In other words, your entire Blockbuster store fit on your wall."

- 30 -

Bill Hicks

I just got an email that Borders is going out of business in Chapel Hill, NC--a location that has within 10 miles three universities and probably the most literate segment of the whole state's population. There's a trend here.

Lance Mannion


I think the trend is for badly managed companies having a harder time making it through a depression than other companies. How are the independents and the Barnes and Nobles in the area doing?

Ken and Ken, thanks for the elucidations.

actor, I think Ken and Ken speak to your point. My point is that our local video store was a nice place to go to rent movies and the world doesn't have enough nice places.

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