How Dead Is the Video Rental Business?
January 19, 2010

I was shocked to get a Blockbuster flyer today that offered me, as a potential new member, 30 days of free movie and game rentals. Small print says it’s only one rental at a time and a credit card is required for the video game rentals. Still, that’s a pretty good deal. Almost enough to make me think about going back to them, at least for a month.

I wonder, though, how you define “new”? I’m pretty sure I had a Blockbuster membership back in the early 90s, and I know KC did about 10 years ago. We gave it up a while back, because why rent for $4 when you can wait and buy DVDs for $5 used? Or why worry about making a trip to the local store when you can have movies come to you through the mail or online?

Yeah, everyone’s already talked about these reasons for Blockbuster’s long, slow demise. But I was wondering, is there anyone out there who’s still a member? If so, why? I mean, even my parents, traditionalists though they are, went to Netflix when Blockbuster ticked them off by demanding they leave a credit card on file with them even though they’d been members for years and never had a late fee. Seems to me that Blockbuster had its day in the sun, made a lot of money in the VHS days, and wrongly expected its business model to continue indefinitely.

42 Responses  
Thom writes:  

Brick and Mortar stores are toast. The only plus they had over netflix is pretty much dead-a group of friends could walk in on Saturday night and make an impulse rent. With the Netflix streaming and Redbox, that advantage is pretty much gone.

Johanna writes:  

I did notice, on the flip side of this flyer, one other advantage Blockbuster has over Netflix: they were running an ad for their rent-by-mail service, and they mentioned “no extra charge for Blu-Ray”.

Michelle Smith writes:  

I think I still have a Blockbuster card. I mean, I never actively canceled it. But I also haven’t gone there for many, many years. I don’t do Netflix either, though, because I’m not that big of a movie fanatic. My choice is my local library. It’s free and they get new releases pretty quickly.

Adam writes:  

So far not much has changed, at least here in Canada. I can understand why the US would be different though and really, it’s just a matter of time before more people become more and more technically inclined.

But there are still many out there that are resistant to change. The same group who doesn’t care about Bluray.

~chris writes:  

I still have a Blockbuster card, and used it last week for the first time in many months. I’m on the Netflix 2-a-month plan (which is perfect for me) but wanted to watch something right away while keeping my current Netflix DVD. I should mention that Blockbuster mailed me a coupon for $2 rental, and I have about $20 left on a Blockbuster gift card I received about 2 Christmases ago. I would still use Blockbuster from time to time even though they usually don’t have the DVD I want to see. I’d better use up that gift card quickly though; the Blockbuster nearest me has closed down.

Rivkah writes:  

Blockbuster is undeniably dead, but I would argue that doesn’t mean video rental, brick and mortar stores are as well. In Austin, there’s a video store called “I Luv Video” that’s locally owned and it’s actually been doing BETTER every year. Why? Because they offer something Netflix does not: videos that are difficult to find, often out of print, and categorized INCREDIBLY well. And they have TONS of videos, even Miyazaki films that have never been translated and a huge foreign film section, not to mention a “cult classics” section and areas categorized by director.

Also, the other neatest thing about the store that I think really keeps it in business is that they have shelf-talkers. I’ve seen this at Book People in Austin as well, and Austin Books occasionally, and it seems to really, really work. They’re often wittily worded, and in the case of “I Luv Video”, they also mark on the cases and sign funny things in sharpie on the things they both love and hate. There’s been a plethora of movies I’ve rented just because of the shelf talkers.

Not to mention an incredibly knowledgeable staff of college students who freakin’ LOVE MOVIES and know what the heck they’re talking about … or what you’re trying to.

And for the same reasons I prefer getting books in a store instead of online, I like the face-to-face interaction, as well. :)

Joan writes:  

If I had a brick-and-mortar store available, I would still use it. I’m on Netflix and I love it, but there are times that I miss being able to browse and wander and discuss. Impulse renting is tough with Netflix. I really miss the awesome indie video stores in the town where I went to college, with sections labeled things like “cult movies you’ll talk back to” and “film noir for a miserable Christmas” (seasonal but worth waiting for). But I live in the middle of nowhere now, never have had a Blockbuster nearby, no longer have any B&M rental store at all, and am stuck with Netflix alone. Oh well.

Johanna writes:  

Adam, I disagree with your characterization. I think people are resistant to changes that don’t benefit or make sense to them. People who have stopped renting from Blockbuster have done so because they have better (cheaper or more convenient) options. People haven’t switched to Blu-Ray because they don’t see an obvious benefit — it’s more expense, it requires more and different equipment, etc.

Johanna writes:  

Rivkah, that store sounds really cool. It’s a shame there aren’t more places like that. I’ve never seen one myself.

Jim Kosmicki writes:  

you have to be willing to think ahead or wait for movies to come in the mail. You have to be willing to wait and trust that the movie you want used will be available used. In many ways, the combination of Redbox for the immediacy and Netflix for the selection is the one-two punch.

I too like browsing, but honestly, at a video store, there’s only so much browsing can tell you – the back of the case gives you what the Netflix description gives you. Unless you have a local store doing more in terms of salesmanship, Blockbuster is about having it NOW, not being able to touch it.

Blockbuster’s mistake was making things like late-fees their primary source of profit/income. It was something that was easy to do differently and use as a competitive advantage. Had Blockbuster been as concerned about being a library of choices, some of them otherwise hard to find, instead of changing content to enforce a few people’s view of morality and selling backstock as quickly as they could get it out the door, they would have had a long-term advantage to play off.

James Schee writes:  

My local grocery store has a Blockbuster Express box machine that lets me get movies (and eventually Blu-Ray movies it states) for $1 a day. It and the Redbox machines found at most Wal-Marts, Mcdonalds and the like are how I watch most movies these days.

Cheap, easy access for movies I just want to see once, not own.

Johnny B writes:  

The small town in which I work (as opposed to the smaller town in which I live) still has a Blockbuster, as well as what I assume is a regional chain called “Family Video”. A lot of people around here distrust Netflix and the like, and prefer to go somewhere and get them in person, mostly because that’s what they’ve done for years and years. Not exactly early adopters here in south central KY.

Me, I’m very happy with Netflix, because I can find just about anything I’m looking for on it- that was a problem with the brick and mortar stores here. I remember going to a Blockbuster and asking if they could get Lost in La Mancha, the doc about Terry Gilliam’s ill-fated attempt to film a movie about Don Quixote, and I was looked at like I’d just eaten a bug. Signed up for Netflix the next day.

Jim Kosmicki writes:  

In my experience, college towns have the best chance of having a good locally owned video store. Bowling Green, OH had Video Spectrum, which sounds a lot like the I Luv Video mentioned by Rivkah. I know am back in Nebraska in a community much the same size as Bowling Green, but with no University (just a community college) and local movie buffs would die without Netflix. We still have 4 brick and mortar rental stores, but they are typical new release focus chain stores with no real depth of selection. In fact, i regularly cruise their sale bins to purchase the more obscure items to then put in our department library at the community college.

Adam writes:  

Johanna, what I was trying to get at was that the same people who refuse to understand BluRay or make the leap tend to be the same people who don’t want to shop online or use things such as Netflix. (Even though we don’t have anything like that in Canada.) They all seem very resistant. But, like I said it’s only a matter of time before we have something like that here as well. But until then they seem happy to come to the ol’ brick and mortar.

Argo Plummer writes:  

I still have and use a Blockbuster card quite frequently for three reasons: 1) I have three children. They like to go into the store and pick a movie. The queue system on Netflix really doesn’t work for their temperment. Plus, they are always running good deals on kids movies (right now they are $.99 for five days 2) Blockbuster Rewards: Rent one, get one free every Mon-Wed; one free rental a month; one free rental for every 5 movies I rent in a month–all for $10 a year. For less than $1 a month, I can get quite a good value 3) We are not a Neflix friendly family–we had a membership for a while and found that we let movies sit around for weeks at a time and eventually returned them without watching them. $9 a month isn’t a deal if you are paying it for nothing. With Blockbuster (or any brick and mortar store) we can run and rent a movie when we want to. Of course, with the advent of DVR’s we don’t do this very often as we can DVR our movies, but the point is Netflix doesn’t work for us because we don’t rent movies very often for us and a Blockbuster membership is still free.

Two last things: By law, Blockbuster can’t require you to have a credit card on file–they may try and force you, but they have to offer an alternative. My mother had a blockbuster account for years and never gave them a credit card. You have to fight for it, but they do offer an alternative. Of course, she uses Netflix now, but still…And we have a video store here in Boulder that sounds a lot like that one mentioned earlier in Austin…great store and still viable even in the Netfilx, streaming video, MP3 player culture and I think it works largely because of the selection and how well the business is run, but also because it’s core market is college students, who are largely driven by impulse and by finding the obscure and exotic and they have the time to do so.

Ralf Haring writes:  

Nice article about a few factors that led to the demise of Blockbuster. http://www.slate.com/id/2133995/

Adam: “what I was trying to get at was that the same people who refuse to understand BluRay or make the leap tend to be the same people who don’t want to shop online or use things such as Netflix”

I agree with Johanna. The conclusion you draw is not reflective of my experience. People understand bluray fine and seem to be resistant to it not because of resistance to all things new, but because it is not enough of an improvement over dvd to warrant caring about it. Streaming or downloadable content is the next step that will have mass adoption.

Johanna writes:  

Adam, I’m with Ralf. I’m not interested in “leaping” into Blu-Ray myself, and yet I have an AppleTV and use other online methods. So based on my experience, your lumping these two kinds of customers together is just wrong.

Johanna writes:  

Argo, thanks for sharing your experience. That’s the kind of story I was interested in, finding out more about the strengths people saw in Blockbuster. With the kids and rewards, your approach makes perfect sense.

Adam writes:  

Eh, I’m just sharing what I’ve noticed about my customers is all.

Johanna writes:  

Customers? Do you run a video rental outlet?

Adam writes:  


Johanna writes:  

Oh, well that certainly gives you a horse in this race! :)

Alan Coil writes:  

Jim Kosmicki mentioned Bowling Green, Ohio, which has the best cd store I’ve ever seen outside a major city, Finder’s Records.

I quit using Blockbuster when they started censoring movies for me. I want to see them the way the directors made them.

Johanna writes:  

I spent a year in Bowling Green, and I don’t remember either of these places. I’m guessing I was too mainstream then to care. Sounds like my loss.

Victor writes:  

There is nothing wrong with brick and mortor rental stores such as Blockbuster. I personally like them, because it allows me physically browse the movie selection and instantly obtain the movie I want without relying on the US Postal Service. I have been a Blockbuster member for over 20 years, and I am relatively happy with them. I tried Netflix when they first began their operations, but became very disappointed with their service because they did not have the infrastructure they now have and it took 3-4 days for me to receive a movie by mail and occasionally a movie would get lost in the mail. I fortunately have a Blockbuster store in my neighborhood that I drive past on a regular basis, so I am not inconvenienced in any way. I have an online rental agreement with Blockbuster that also allows me to return my online rentals at the store and pick up another in-store rental. This works great for me because it allows me to choose a new release Blue-Ray movie that is in stock at the store, but is unavailable to me online due to a long wait. I truly have the best of both worlds. While movie streaming offers instant gratification, the video and sound quality is not on par with what can be realized when playing a physical disc. Movie streaming is not for videophiles at the present time. I recently spoke to both Blockbuster and Netflix regarding these streamlined discs, and it seems the only way to get around the issue is to purchase the movie. The rental companies purchase these movies in volume and want a discount. The movie studios do not like rental companies, because they are losing money by having to offer a discount. They want people to purchase movies, not rent. By offering a stripped down version, they are literally forcing us to purchase a movie if we want to enjoy certain features. The stripped down version should at least include scene/chapter selection. There is nothing more annoying than having to fast forward through the preview of coming attractions and movie to get to a point where you would like to pick up where you left off from a prior viewing session.

No matter who you rent from there are caveats to be aware of:
* Brick and Mortor-Store locations not convenient for everyone. Limited selection. Travel time and fuel costs considerations. Next online rental from queue will not be shipped until in-store exchange is returned.
* Online-Long wait for new releases. In order to receive your next movie at a desired time, you must factor in US Postal Service travel time and be cogniscent of weekends and holidays when there is no postal service.
* Online Movie Streaming-Video and Sound Quality not on par with that of a physical disc. No special features. Movie interruption when internet network is down. Not currently for videophiles. Offers the best future potential.

I feel the video rental business will be around for the forseeable future. Instead of allowing the movie studios to dictate our behavior, we need to become more vocal with the rental companies so they can take the appropriate action to configure their business to meet our needs. If they let the movie studios dictate what they can purchase and market as a rental, and fail to offer their customers the quality of movie medium we desire, they will surely fail. If enough people complain, things will change for the better.

Thom writes:  

Adam, I’m with Ralf. I’m not interested in “leaping” into Blu-Ray myself, and yet I have an AppleTV and use other online methods. So based on my experience, your lumping these two kinds of customers together is just wrong.

But the truth is, Johanna? The arguments I see against Blu-Ray are the exact same arguments I heard against DVD back when it was new. Okay, the “it’s another disc” is new…but otherwise? There is not a complaint against Blu-ray that was not made against DVD. Personally, while I will watch stuff online or through streaming, it a step back from VHS most of the time. Streaming tends to artifact (pixelate) a lot, older films look fuzzy (my mom states that watching Gone with the Wind on blu-ray was superior to having seen it in the theater when she was younger), sound quality tends to be limited, there are no extras. Seriously, I have 30 year old VHS tapes that look better than some of the streaming video out here. Right now, I would say if you don’t care about how a movie looks or sounds, or if it is blurry and pixelated, then yeah…streaming is awesome. But people who really like movies, and aspiring creative people who might study movies or see film as more than a brief diversion? Streaming is a terrible option. Truthfully, people’s willingness to jump on streaming video over a better product (DVD or Blu-Ray) is a sad fact in favor of those critics that argue America keeps “dumbing down”. Streaming video is easy, so why not?

Jenn writes:  

Ah, I Luv Video! Also in Austin is Vulcan Video. Similar premise, even snarkier staff. And just across the street from I Luv Video….

Really, if you can’t find it anywhere else in Austin (including online and Netflix), you will definitely find it at one of those two stores.

Johanna writes:  

Thom, I agree that streaming is horrible, but much of the time, it’s free (Hulu.com for TV, for example, at least for now). But don’t forget that online also includes downloading options, either legitimate (such as iTunes) or otherwise.

Ralf Haring writes:  

Blockbuster’s move to allow in-store returns of movies rented online was an excellent selling point and they were wise to push that as a way to differentiate them from netflix.

Personally, I think there were more arguments for upgrading from vhs to dvd than from dvd to bluray. With vhs chapter selection and special features were non existent. DVDs were physically smaller (though not by a lot) and didn’t degrade from multiple viewings. VHS had been the dominant format for around twenty years compared with less than ten and the upgrade in video and sound was more pronounced than from dvd to bluray. Just my opinion.

Maybe it’s just my experience, but the streaming services I’ve used are comparable to dvd video-wise. Audio is not terribly important to me, while the lack of extras are. I expect those will be available given time.

It’s really not so much streaming that I expect to be the next step as much as online delivery in any form – buying and downloading a specific movie a la Amazon, iTunes, etc.

I think assuming that people who are streaming are dumb and must not like movies is not conducive to discussion. It’s the whole “not a true fan” fallacy.

Scott writes:  

I initially stopped going to Blockbuster when twin toddlers pretty much devoured any time we had for movies.

Then, when they were old enough to enjoy the occasional family movie night, I was shocked to find Blockbuster carried no VHS tapes at all.

Having largely learned to amuse themselves with those antiquated woodpulp-based thingees, the kids rarely have an itch to watch a movie and we have found that our cinema desires are largely sated by our local library (who has kindly not trashed all of their VHS tapes… yet).

Your friendly neighborhood luddite,

Thom writes:  

“I think assuming that people who are streaming are dumb and must not like movies is not conducive to discussion. It’s the whole “not a true fan” fallacy.”

Not dumb…but a definite, “Eh, whatever” attitude. For the record, a majority of the Blu criticism I see is usually couched in a way that suggests those of us who adopted Blu are just dumb suckers. I am presuming it is truly stupidity at play…but convenience is. I think streaming video appeals to convenience… and I don’t think “convenience” is as solid of an argument for stuff as people make it out to be.

I realize often streaming is free, and as I said, I use Netflix streaming myself. But given a choice, I would rather watch the Blu-Ray or DVD.

As far as the difference between VHS-DVD and DVD-Blu-Ray goes… in the VHS days I tried those arguments…most people didn’t care. They thought my reasons (better picture, chapters, menus, etc) were not any good as well. They still basically believed it was a conspiracy to get more money out of people. Hence my skepticism. I think people *believe* the difference is truly lesser…but I tell ya, the ability to check chapters or see what the special features are on the disc without leaving the movie is pretty swell. Picture in picture is really nice on Blu-Ray. The capacity is that of nine DVDs? The potential there is great.

I know plenty of people who don’t care about sound…I know a lot of elderly folks who appreciate the finer sound options of 5.1/7.1 surround. I think that people forgot, stereo sound can be muddled for some viewer, the crisper surround sound is a boon for such viewers. This is not an issue with DVD, as most DVDs are in surround sound…but streaming video? Not so much. I actually can only think of two people in my life that have no surround sound system…if you have one…why not use it to it’s full potential?

Of course, in the end…is blu-ray a way for corporations to get our money? Yeah…that’s kind of the point of entertainment companies. It is not evil. And I hate to break it to folks… if Blu-ray fails and streaming really takes off? You think it’s going to be free? When they get a better quality of download? When they get it up to DVD quality? Is it really going to be free? Hell know, they will fine a way to demand your money-new and special streaming machines that require large bandwith, you will have to pay higher cable fees to get bigger bandwidth and fast download speeds so your movie is not pausing to buffer every so often? There’s already talk of charging people if they go over a certain amount of bandwidth each month… streaming video of a good quality would likely cause people to get shocks on a monthly basis. I think people are being a tad short sighted in their pro-streaming video. It’s the existence of Blu and DVD that keep streaming cheap right now. If that were to become all there is? Believe me…people will think of the good old days when we had copies in HD that we could keep. And they had special features and other cool stuff.

Thom writes:  

Uh…sorry about the long rant.

“For the record, a majority of the Blu criticism I see is usually couched in a way that suggests those of us who adopted Blu are just dumb suckers.”

I meant to state I do not get this impression from yourself, Johanna. Just some of the criticism I see online (and some folks responding here) have left me feeling like I have to prove *i’m* not stupid…so I over compensate. :)

David Oakes writes:  

So dead that they have to advertise in the gutters of your blog…

filmbeats writes:  

I think different methods of renting movies appeal to different groups and thus I don’t see video rental from physical stores dying out. There’s just nothing that can replace being able to browse the aisles and see something new or different. Not everybody likes to pick their movies from a computer screen.

Mail-based, physical stores, on demand from satellite/cable, online streaming, I’d like to see all these different distributions methods co-exist because they all offer different advantages that might suit me depending on my situation at any given moment.

Rental Calendars Have Different Release Dates » DVDs Worth Watching writes:  

[…] and they’re trying to make a big deal of that in their advertising. (Whatever they can do to stay relevant, […]

JR writes:  

I have been going to Family Video a local “brick and mortars” for 23 years. They have the best customer service and great selection (and prices). I always thought they were the only store but recently found out they’ve got 700+ locations and opening new stores. Check in your area. They have worked for me all these years.

DS writes:  

I am also in the process of opening a video rental store in a small community, 7000.00 people. There are no other rental stores and only 1 red box which is always broken. It is a college town and the location of the store is near a price chopper and other shopping stores, banks, restaurants. I am going to have a western theme to the store since I live in a rural community and will have a website in which customers can reserve and purchase on line. I guess I am taking a gamble but feel it would be successful.

Any advice is helpful

Jerum writes:  

I like being able to walk around and browse through movies. Plus I buy a lot of used DVDs from them. I still prefer DVDs. I have a ps3, so I can run bluray but DVDs are still cheaper plus no one else I know has a bluray player. So if I bought Bluray I wouldn’t be able to take movies to a friends house and watch it with them.

David writes:  

Well to all who are curious,
I own a brick and mortar video rental store. We are located in a small town with less than 2k people. We opened 13 months ago with 17 titles. The store has grown to over 800 titles and over 2k movies. The end of movie rental stores is not here. The whole key to being successful with a Redbox and Block Buster kiosk located close enough to smell is……………..customer service! We have a well dressed friendly staff. The customer is #1…something that has been lost in corporate america. You me or anyone else deserves to be treated better when we are spending our money. We should all demand to be treated like we are the only customer that exist for the time and money we spend with a retail chain of any kind. It is a requirement of my employees and is grounds for dismissal if the members are not treated that way……

serena writes:  

i would like to know if this people feel the same way now being 2 years later.how are the video stores still going?

Ralf Haring writes:  

The video stores *aren’t* still going, by and large. They used to be ubiquitous and are now extremely rare. Big box stores keep slashing their video sections just as they previously slashed their cd sections.

Michael Miller writes:  

I use to own the largest video store in our area back in the nineties, and have been thinking about opening up another one again. I have all most 3000 of my own titles alone without having to buy any, except extras of the new titles…I would this time try to keep the store smaller then it was before, of course movies back in the 80’s and early 90’s movies at my cost was about 60 dollars and they are a heck of a lot cheaper now. But still giving it some thought, only now would have to find distrbutors to deal with, the ones I use to know are no longer, and of course the computr systems are some what cheaper also…got some good reasonable thoughs, let me know, but it might just happen again..by the way the population around here is about 30,000 to 45,000 in the surrounding area, just setting the rental prices and time is of great though, there are a few red boxes around and they are at the grocery stores mainly if not only and that’s about four with two kisosk stands each.


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