Aug 24, 2011 (The Columbus Dispatch - McClatchy-Tribune Information Services via COMTEX) --
A decade ago, between 10 and 15 people would line up outside the Video Central store on Bethel Road every Monday night to snatch the week's new releases.
At that time, there were four Video Central locations in Columbus, open 24 hours a day, seven days a week to meet customers' needs for home entertainment.
Since then, half the local Video Centrals have closed, the remaining stores' hours have been trimmed, and the big dog in the video-rental industry, Blockbuster, has filed for bankruptcy.
Online subscription services and online streaming of movies seem to have put traditional video stores on the road to extinction.
It's hard to remember a time when people had to go to theaters to see films. Movie studios started releasing videocassettes in the mid-'70s, according to a report from the Encyclopedia of American Industries.
Eighty-four percent of households had at least one VCR by 1984. In 1985, Blockbuster opened, and the surge of mom-and-pop video stores continued, the report says.
Video Central owner Phil Wolfe started working at one of the video-rental stores back when VHS tapes were still the big thing. He eventually bought the Bethel Road location in 2002 after the death of his uncle, who started the local chain.
VHS-rental revenue peaked in 2000 at $11.6 billion, but along came DVDs, a transition Wolfe remembers well, being forced to stock both formats while the public made the transition to the new technology.
"This industry has changed so fast," he said. "You didn't know where it's going next."
What's next took the forms of online and by-mail movie delivery and the advent of the ubiquitous Redbox machine.
The 23 million reported members of Netflix can stream video directly to their TVs or computers. And Redbox users can find one of its 27,800 kiosk locations during a routine grocery or shopping trip.
The shift in consumer preference has been hard on the traditional video stores, said Wolfe, who has watched a decline during the years.
Between 1997 and 2007, the number of traditional video stores nationwide fell by 30 percent, from 23,036 to 16,237, according to U.S. census data.
In Columbus, there were 98 video stores in 2002, a total that fell to 70 in 2009.
Throughout the U.S., traditional video stores saw their share of the $7 billion rental industry fall from 51 percent in 2009 to 36 percent in 2010.
Netflix, which provides both online and by-mail delivery of movies, increased its market share by about 9 percentage points to more than 34 percent in that period, but the rental giant recently grabbed headlines after it raised its monthly rate, starting in September for current members.
The cost for streaming a movie online or having the same movie sent to you increased from $9.99 for both options to $7.99 apiece.
The price increase helped boost business for Wolfe, who saw a jump in new memberships from 42 in July 2010 to 81 this year at the same time.
Meanwhile, Blockbuster filed for bankruptcy in 2010 and was auctioned for $320 million to Dish Network in April 2011.
Riding the wake of some disgruntled Netflix customers, Blockbuster is getting back to business, said Kevin Lewis, the company's chief marketing officer.
Blockbuster's game plan for its remaining 1,500 stores involves giving customers easier access to movies, creating more value for their money.
This is partly through its Total Access plan that allows customers to order movies online but also exchange them for a new movie in the store an unlimited number of times, Lewis said.
"Movies are an escape, but it can be a problem if not priced properly," he said.
One of Blockbusters' problems coming out of bankruptcy, Lewis said, was establishing a better price.
"We noticed something we needed to change," he said. "We moved 99 percent of the store to 99 cents a day."
The price change and online subscription, which offers unlimited in-store exchanges, represent a couple of the chain's strategies to stay competitive.
Wolfe hopes to remain competitive but is hedging his bets. He and his wife, Lisa Boyle, opened a Chocolate Cafe franchise in Columbus as an exit strategy to the rental business when closing the video store looked imminent.
Despite the recent increase in business, he said he still doesn't know how much longer Video Central will be open.
The growth of online subscriptions and streaming is expected to "outpace DVD rentals in the coming years," the Encyclopedia of American Industries said in its report .
"What appeared to be at issue for the rental industry is not whether rental would eventually convert to streaming but when," the report stated. "Some experts expected DVDs to begin to be phased out by 2014."
Despite the decline of video stores in recent years, Wolfe believes video stores will always appeal to people just as record stores have throughout the years.
"There is something about walking through a video store and looking at all the titles and touching the movies," he said "That's something online can't offer you."
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