Thursday, July 29, 2010

Video Stores on the Verge of Extinction?

As most of you know, my husband and I own a video store.  You may also recall that I owned another video store with my SIL which we sold last April.  So I have, in effect, been in the movie business for the past 6 years. 

Move Gallery has recently closed it's rental business and is now in the process of liquidating their stock.  I am informed that Blockbuster is about to die as well and even that Roger's wouldn't be doing half so well if they didn't sell cell phones at their locations as well.

The demise of all these top video rental franchises has prompted a series of news reports all in which discuss the demise of the video rental store business.  A news report aired today entitled "Why Would You Go to A Video Store?".  The premise being why would you leave the comfort of your own home to travel the short distance to your local video store. (Okay some of you live in rural areas but a lot of you if not most live in urban areas).  If we were all about convenience from the comfort of our homes then why don't we stay home and make our own coffee instead of going to Tim Horton's or Starbucks.

What these reports do not discuss is the cost of PPV and VOD.  While we have been in a recession of the past year and a half, have they cut their costs?  No way.  Not only are their new release movies more expensive than a rental in my store, they also charge more if you want it in HD.  Not to mention, they only offer the top new releases.  While those of you in the US may benefit from companies like Netflix etc, those companies are not available to us in Canada and I can't imagine why you'd want to fill out your selection and then wait for titles to arrive in the mail. Maybe if I lived way out in the boonies, it would be convenient.

With rising gas costs it seems that everyone around us are raising their prices, from the pop guy to the candy man to the chip guy.  However, if we raise our prices barely 25cents we'd have a mutiny on our hands.  Change our programs or day specials a wee bit and literally customers have left slamming down their movies and walking out.  They always think that there is a better deal down the road and some times there is but most often we feel we're pretty reasonable. We're not getting rich, we're supporting our family... barely.

Still the perception out there is that with VOD and PPV out there that it is only a matter of time before stores like mine are closing.  Indeed at the pig roast this weekend, I was questioned by two different sets of people throughout the afternoon as to whether or not we could actually make a living running a video store.  I thought this bordered on rudeness.  After all, I wouldn't go up to any one in construction and ask how much money they made, whether they could support their family. 

What people don't realize is that VOD, PPV, Netflix and downloads are only a small portion of the multibillion dollar industry.  Even if their portion of the revenues added up to as much as 5%, it still leaves plenty of room for DVD sales and rentals for the rest of us.  And believe me, they are not attracting more than 5% of the market at this point. 

People also don't realize that the power behind things like VOD, PPV and Netflix are movie studios who want to cut out the middle man as much as possible.   In fact, they are constantly discussing ideas like providing all new releases to Blockbuster and VOD 30 days before they allow the rest of us to rent them.  By the time, I would be allowed to rent the movies, I might as well save my money.   Why would they do that when Video Stores provide them with the biggest revenues even over and above what even Walmart generates?  I just don't get it.

I am not completely naive.  I realize that eventually we will get to the point where everything is done online and that even one day we won't even refer to it is as being online (it's not for nothing that I've watched 1984), it will just always be there. I just don't think it will be as fast as people say.  If it was free, maybe but so long as we are having to pay to be online, pay for cable, pay to order movies, I think we have quite a few more years still.  I think it's those who are really into ordering or downloading movies (often illegally) that spin up this whole hype thing that the mom and pops video stores are dying. 

So why are places like Movie Gallery and Blockbuster suffering?  One, they are publicly traded companies.  Once you go public you have to pay presidents, vice presidents, CEOs, stockholders etc. It becomes extremely expensive for them to run.  These companies are extremely top heavy and when trouble hits they aren't able to make the cuts necessary.  Add to that that it is often difficult to keep stores running well when they are not owner run.  Most successful business have their owners involved in the day to day business.  I have seen more businesses go under because of an absent owner relying heavily on a manager who doesn't always have your best interests at heart.  Think about it.  How many times have you gone into one of these stores and been disappointed by the quality of service and the 3 or 4 giggling teenagers gossiping behind the counter who could care less about helping you.  I'm not saying all stores are like that but many are.

Then they eliminated late fees.  That was a huge mistake.  Think about it, you tell your customers that it's okay to keep your movies out late, you won't be charged until 30 days go by and then they will charge your credit card the price of the movie.  Okay. you keep your movie out for 29 days, take it back and all is forgiven.  Tell me how much potential revenue did they just lose on that one movie that was unavailable for rent?  Sure, BB and MG have tons of copies but only of the top new movies.  So if they had 100 copies and you can bet they have an average of 2000 customers or more going through their store a week, what happens to the other 1900 customers who wanted to see the big new movie?

What it we were to go to the public library and take out as many books as we wanted and just kept them for as however long we wanted, no charge.  The library would be empty.

Yet people constantly bitch at us about our high late fees (we charge $1.00 a day) and how MG was so much better.  Yeah, and they went out of business.  Then people like to make snide comments of how we make all our money off them being late and how we must just rake it in because they are so bad at returning movies.  Um yeah, that's right. Would you like a tour through my mansion or even take a look at my $9.99 fake weddinng ring from Walmart because I can't afford to get my real ones sized, or how about that wonderful staycation we're taking this year.  Don't even get me started on people who say they've returned movies when they actually didn't only they argue with you, swear at you and then 3 days later show up with the movie and no apology.

The point of this whole post is to make people aware that there is more to these companies going under than just a decline in rentals.  Part of a successful business these days means you have to be diversified and we try to do that by bringing in movie related products and electronics for sale.  It's true that if we want to stay afloat we need to turn our business into an "entertainment destination" rather than just a mere video rental store. 

So if you're tempted to order PPV or VOD just remember that sometimes it's better to have spent the money upfront than to get a whopping big bill at the end of the month.  Also, don't forget that the little video store around the corner is some guy or gal just trying to make a living.  Cut them a break and give them a chance to get to know you by name.  Going out to the local store becomes more than just an errand, it becomes an opportunity to socialize and you never know who you might run into. 

What do you think?  Do you VOD or PPV?

1 comment:

  1. Wow, lots of food for thought here. We were huge Blockbuster people until the one we went to went out of business. Then we started doing Netflix but even then my kids get anxious waiting for the new movies so normally we just rent from Redbox since there's one just down the street at the grocery store.

    I had never thought about going to a family-owned video store and after reading this post, it makes me want to find out if there is one here in our town.

    We don't order PPV or VOD because it's way too expensive!!

    ReplyDelete

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