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Market fluctuation - Video stores cope with downturn in rentals
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By RYAN SMITH
News Tribune
Renting a movie from a Jefferson City video store was once a frequent occurrence for Peg Dzicek.
But with the advent of cheaper and better technology in the DVD, the Jefferson City woman said her family is now much more likely to buy movies than rent them. And if they end up not liking certain films, Dzicek says she will sell them on the Internet.
"In the end, it doesn't cost much more than a movie rental," said Dzicek.
She isn't alone in bypassing the traditional movie rental.
Revenue from video rentals nationally took an 11 percent hit during the third quarter of 2005, according to data tracking firm Rentrak.
Instead of the old "rent and return" method, statistics show people are increasingly purchasing new or used movies, renting them through the mail, ordering them through pay-per-view channels, or now downloading them onto I-Pods.
Billie Twitchell of Camdenton is one them.
"I used to rent more, but I don't like having to take movies back, so sometimes I'll just order pay-per-view," said Twitchell.
Erica Kaullen, video department manager at entertainment retailer Hastings in Jefferson City, said she has noticed the decline in rentals.
"Convenience is a big factor," said Kaullen. "People don't want to have to go back out and return movies or worry about late fees."
But people aren't watching fewer movies at home, said Blockbuster Video Marketing Director Melissa Hennen, they are just changing the way they acquire them.
"They are often getting them in different ways than in your regular 'brick-and-mortar' buildings," said Hennen.
In recent years, large retailers like Wal-Mart and Best Buy have hurt rental stores by selling newly released movies on DVD below their own wholesale price to draw in customers who might buy products with higher profit margins.
"Why bother renting a movie for $4 and have to take it back and mess with late fees when you can buy it for $15 at Wal-Mart," said local resident Cliff Lewton, who said he owned about 50 movies on DVD.
Recently, online mail order competition from companies like Netflix has also cut into traditional rental business. Netflix signed up over 3 million subscribers by 2005 by offering DVDs that could be kept for as long as renters want for a monthly fee.
The steady decline is leading some experts to signal the death knell for rental chains with thousands of stores like Blockbuster and Movie Gallery and smaller 'mom and pop' movie rental stores.
But many rental stores are adapting to the new market, said Hennen.
Many stores now rely more on sales of previously viewed movies, merchandise and food.
Hennen said many customers have become accustomed to waiting a few weeks until a new title has cooled off as a top rental and is put up for sale.
"It's a great deal for our customers," she said.
Many rental stores have also tinkered with different specials to draw more customers.
Within the last year, Blockbuster ended late fees, instead charging customers full price for a video not returned within a seven-day period.
Movie Gallery has a "Reel Players" promotion that lets its members earns points by renting or purchasing movies that can be used for discounts or free rentals.
Hastings often packages of popcorn and soda with rentals, gives half-price rentals for new members, or reward members for returning movies early.
Ultimately, the less a business depends on video rentals, the better it may be off in the future.
Plaza Video and Tanning, 821 Eastland Drive, is half video store and half tanning salon.
Since Hastings also sells books, games, CD's and other merchandise, it is less affected by the shrinking rental market, said Kaullen.
Though the 'bricks-and-mortar' video store rental store is in the decline, don't look for them to be extinct anytime soon, said Hennen.
"I think there will always be a need for a video store because some people want instant gratification and want to be able to just drive somewhere, get a movie and go home and watch it," said Hennen.
Regular Hastings customer Jon Kaesik said he will rent movies as long as the store offers them.
"It's still a pretty good deal," said Kaesik.
rsmith@newstribune.com
But with the advent of cheaper and better technology in the DVD, the Jefferson City woman said her family is now much more likely to buy movies than rent them. And if they end up not liking certain films, Dzicek says she will sell them on the Internet.
"In the end, it doesn't cost much more than a movie rental," said Dzicek.
She isn't alone in bypassing the traditional movie rental.
Revenue from video rentals nationally took an 11 percent hit during the third quarter of 2005, according to data tracking firm Rentrak.
Instead of the old "rent and return" method, statistics show people are increasingly purchasing new or used movies, renting them through the mail, ordering them through pay-per-view channels, or now downloading them onto I-Pods.
Billie Twitchell of Camdenton is one them.
"I used to rent more, but I don't like having to take movies back, so sometimes I'll just order pay-per-view," said Twitchell.
Erica Kaullen, video department manager at entertainment retailer Hastings in Jefferson City, said she has noticed the decline in rentals.
"Convenience is a big factor," said Kaullen. "People don't want to have to go back out and return movies or worry about late fees."
But people aren't watching fewer movies at home, said Blockbuster Video Marketing Director Melissa Hennen, they are just changing the way they acquire them.
"They are often getting them in different ways than in your regular 'brick-and-mortar' buildings," said Hennen.
In recent years, large retailers like Wal-Mart and Best Buy have hurt rental stores by selling newly released movies on DVD below their own wholesale price to draw in customers who might buy products with higher profit margins.
"Why bother renting a movie for $4 and have to take it back and mess with late fees when you can buy it for $15 at Wal-Mart," said local resident Cliff Lewton, who said he owned about 50 movies on DVD.
Recently, online mail order competition from companies like Netflix has also cut into traditional rental business. Netflix signed up over 3 million subscribers by 2005 by offering DVDs that could be kept for as long as renters want for a monthly fee.
The steady decline is leading some experts to signal the death knell for rental chains with thousands of stores like Blockbuster and Movie Gallery and smaller 'mom and pop' movie rental stores.
But many rental stores are adapting to the new market, said Hennen.
Many stores now rely more on sales of previously viewed movies, merchandise and food.
Hennen said many customers have become accustomed to waiting a few weeks until a new title has cooled off as a top rental and is put up for sale.
"It's a great deal for our customers," she said.
Many rental stores have also tinkered with different specials to draw more customers.
Within the last year, Blockbuster ended late fees, instead charging customers full price for a video not returned within a seven-day period.
Movie Gallery has a "Reel Players" promotion that lets its members earns points by renting or purchasing movies that can be used for discounts or free rentals.
Hastings often packages of popcorn and soda with rentals, gives half-price rentals for new members, or reward members for returning movies early.
Ultimately, the less a business depends on video rentals, the better it may be off in the future.
Plaza Video and Tanning, 821 Eastland Drive, is half video store and half tanning salon.
Since Hastings also sells books, games, CD's and other merchandise, it is less affected by the shrinking rental market, said Kaullen.
Though the 'bricks-and-mortar' video store rental store is in the decline, don't look for them to be extinct anytime soon, said Hennen.
"I think there will always be a need for a video store because some people want instant gratification and want to be able to just drive somewhere, get a movie and go home and watch it," said Hennen.
Regular Hastings customer Jon Kaesik said he will rent movies as long as the store offers them.
"It's still a pretty good deal," said Kaesik.
rsmith@newstribune.com
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