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Seeing redbox [Northwest Florida Daily News, Fort Walton Beach]
(Northwest Florida Daily News (Fort Walton Beach) Via Acquire Media NewsEdge) Jun. 27--During the final years of his career as a middle school history teacher, Jim McDaniels often dreamed of the days when his primary pursuit could be running his local video store.
McDaniels had opened several of them in the past 15 years. And along the way the challenges mounted, including competing with giants such as Blockbuster and the ever-expanding growth of cable and satellite TV.
More recently, extra competition has arrived in the form of Netflix and redbox. It all has combined to put a big hurt on local video stores.
"We're in our dying days ... we're hanging on by the skin of our teeth," McDaniels said this week from his Seacoast Video store in Santa Rosa Beach. "Making a profit is a distant memory. I don't know how long we'll be able to hang on. We're just breaking even."
The Associated Press reported recently that Netflix Inc. is one of the few companies to prosper during the worst recession in 70 years.
But Netflix CEO Reed Hastings appears to be worried about redbox, an even cheaper DVD rental service run by one of his former lieutenants. Redbox has emerged as the largest operator of DVD-rental kiosks, with more than 15,400 vending machines set up to dispense $1-per-day discs at supermarkets and discount stores.
"By the end of the year, kiosks will likely be our No. 1 competitor," Hastings said in a recent conference call. "There are already more kiosks in America than video stores."
Nobody has to tell that to McDaniels, who once had his own stores in Seagrove Beach and Panama City Beach. And in at least a half-dozen attempts to reach local video stores listed in the phone book, the response was a recording saying the number was no longer in service.
"Netflix took us down about 20 percent," McDaniels said. "But we had a lot of customers come back to us because the longer they were members, the longer it took to get what they wanted. Now redbox has knocked us upside the head."
Mitch Newton of Fort Walton Beach bought his first Network Video franchise in 1993 and at one time had four of them. Now he has one, and much of his energy goes to the Showbiz Tan franchises that have moved in to the departed video locations.
"Back when video stores started and it was all VHS, renting made so much more sense because buying the product meant spending $70 or $80 or more, Newton said.
"The arrival of Netflix and redbox has had an impact, but it's difficult to measure with all the different technology options, improved television, pay-per-view and low-cost pricing on sales of DVDs," he added. "Those are all pretty much equal."
Newton's Network Video on Beal Parkway has had a service since 2007 in which customers pay about $20 a month so they can rent any one movie at a time with no late fees.
And what about the future?
"Right now, it's profitable, and as long as business is profitable we'll keep on plugging," Newton said. "One thing Netflix does not satisfy is the immediate impulse. When it rains, our business is up anywhere from 20 to 50 percent."
The Associated Press reports Netflix's 10.3 million subscription customers sift through 100,000 movie titles, while redbox machines carry about 700 discs with 200 titles, mainly recent releases. Redbox relies on the $1 nightly rate to encourage people to experiment. Four million people have swiped a card at one of the kiosks in the past month.
But not everyone is sold on those alternatives. In Bluewater Bay, the Network Video owned by Beth Brown near the Winn-Dixie was getting business one day last week from a range of customers, including James Fenton of Bluewater Bay.
"I rent two or three every couple of weeks, and I try not to fall asleep while I watch them," Fenton deadpanned.
"I like to come in and shop around and look, so yes, I like the visual aspects," Fenton added. "And I feel a little compelled to support local business, which is why I shop at places like the Ace Hardware here."
Brown was out of town and unavailable for comment.
Knowing those who work in the store and having them recognize him rated as another major plus. Checkout clerk Nicole Andrus had no problems engaging in some friendly banter with Fenton.
"If you put a reserve on something, they'll hold it for you even if you don't show up until 7 p.m.," Fenton said. "That's the personal touch. And even if I'm just going to the supermarket, I'll still stop in here and visit."
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