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Online renting, streaming putting video stores out of businessApr 23, 2010 (The Sacramento Bee - McClatchy-Tribune Information Services via COMTEX) -- First, people decided they didn't want to drive to the movie theater. These days they aren't too keen on driving to the video store, either. In a sign of the times, Netflix, based in Los Gatos, saw its stock price top $100 a share Thursday after posting blowout earnings -- the same week that another Blockbuster outlet closed, this one on 29th and K streets in Sacramento. On Freeport Boulevard in Land Park, a Hollywood Video is also preparing to shut down. Customers were greeted Thursday with signs announcing closeout deals of up to 75 percent off. Brick and mortar video stores are under pressure from the online world, just like record stores and booksellers before them. We want to rent DVDs quickly by mail or pick them up at the supermarket. And that's if we bother handling a physical disc at all. Increasingly, we just stream movies on laptops and smart phones or download them right to our PlayStations or Xboxes, so we can watch them on our flat-panel TVs. "The model has changed," said Maithu Bai, owner of Awesome Video, an independent video rental store on Freeport Boulevard. "It's not just here; it's across the nation. In these times, people want something new." Blockbuster and Hollywood Video are closing local outlets as nationally, both companies feel the heat from game changers like Netflix and Redbox, which rents movies for $1 a night out of vending machines in supermarkets. Nearly 14 million people subscribed to Netflix as of the end of March. In 2009, the company's subscriber base ballooned by 31 percent, including more than 1.5 million new subscribers in the fourth quarter alone. Though it started out shipping videos by mail, Netflix now reports that more than half its subscribers viewed its Internet streaming service in the first quarter. Blockbuster also offers online rental options and ships movies by mail. But its legacy of physical stores has been hard to shake. The company posted a loss of $435 million in the fourth quarter of 2009. It has shuttered hundreds of outlets. Hollywood Video's parent, Oregon-based Movie Gallery Inc., filed for Chapter 11 bankruptcy protection in February and closed nearly 800 stores. "There's only so many consumers to go around," and Netflix is winning the battle for their business, said Houston-based entertainment analyst Jack Plunkett, chief executive officer of Plunkett Research Ltd. "That says everything about how viewers' access to video is changing," Plunkett said. "The thing to watch over the short and long term is (whether) storefronts survive at all with their current business model." ------ Call The Bee's Darrell Smith, (916) 321-1040. To see more of The Sacramento Bee, or to subscribe to the newspaper, go to http://www.sacbee.com/. Copyright (c) 2010, The Sacramento Bee, Calif. Distributed by McClatchy-Tribune Information Services. For reprints, email [email protected], call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA. |