Rent is Coming Due
Everyone knows ‘video killed the radio star’ but will digital kill the video store?

BY JACOB SHAFER

It’s Saturday night and Video Droid is packed, as usual.

Patrons mill around the San Rafael store shoulder to shoulder, scanning the shelves, pulling down DVDs for further inspection. A gaggle of kids squeals with delight as they yank cartoons onto the floor. With a sigh, their weary mother reminds them, “I said only one.”

Nearby, a young couple browses quietly in the Romance section, though the man’s eyes can be seen darting over to Action. Shuffling through the crowd, an older gentleman pushes his way past the black curtain marked “Adults Only.”

Up front, the two hardworking clerks are doing their best to keep things moving. In addition to the steady stream of renters filing past their registers, the two young men must deal with a phone that seems to ring every three minutes, as well as customers who approach from the side to ask questions like this: “You know that one movie, with that one actress who was in Charlie’s Angels? Do you guys have that?”

And so it goes every weekend, and many weekdays too, at one of Marin’s most popular and beloved video retail outlets. Given this scene, it seems hard to believe that Video Droid—and other establishments like it—is an endangered species.

But it’s true. An array of competing forces has emerged in recent years to put the squeeze on independent movie rental outfits.

The most obvious culprits are big-box retailers like Blockbuster; they move in and siphon business away from their smaller competitors with glitzy advertising campaigns and attractive marketing gimmicks like their “guaranteed in stock” deal, wherein customers get a free rental if a new release of choice isn’t on the shelf.

Another, more recent, threat to the livelihood of independent video stores is Netflix, the service that allows customers to pre-select a list of titles they’d like to see and then have those titles mailed to their doorstep a few at a time, in selected order. The big draw is that there are no late fees; Netflix subscribers keep the DVDs as long as they want, returning them in a prepaid envelope only when they’re ready for the next shipment. The company reportedly sends out about one million DVDs a day. (Side note: Video Droid owner Mitch Lowe—who, along with his brother Mark, opened the first of the local chain’s six stores about 20 years ago—has also served Netflix in various capacities, including vice president of business development. The connection between the two businesses appears otherwise negligible.)

But as much as corporate behemoths and home delivery services have cut a slice out of the view-at-home movie market, there’s another, even bigger reason why the Video Droids of the world will look very different, if they exist at all, in the not-too-distant future: the approaching digital era.

Just as DVDs supplanted those old VHS tapes (and, perhaps even more analogously, just as MP3s are replacing CDs in the music world), digital downloading may soon begin to take over the at-home movie-viewing market. While still in its infancy, the new technology is already being applied by numerous companies such as Movielink, MovieBeam and CinemaNow, all of which recently launched services that allow customers to download movies at home either over the Internet or via traditional television airwaves (and in some cases, both).

Many of these fledgling companies are owned by one or more of the major movie studios, allowing them to feature a wide selection of popular new releases. And the studios have begun to make their pictures available for download at the same time they’re released on DVD—a display of their growing confidence in the new technology.

“When DVDs first came on the scene, a lot of people resisted them,” says Jasper Kline, a studio consultant who has been closely involved with the development and implementation of what he calls “DVD-free” technology. “But we saw, in a matter of just a few years, the whole thing flip—maybe a lot faster than most people expected. And suddenly we had a situation where there wasn’t really an option anymore; people were demanding the [DVD] format and they weren’t going to settle for anything less. I think we’re going to see that same phenomenon again with [digital downloads].”

Kline sees two impediments to the widespread popularity of digital downloading: a limited number of available titles and a lack of accessibility to the necessary technology. But DVDs, he points out, faced similar obstacles when they were first introduced in the mid- to late-’90s, and within less than a decade the issues resolved themselves.

Another major player in what many see as the oncoming digital revolution is Comcast, the country’s largest cable company and second-largest Internet service

provider. Comcast subscribers have access to an ever-expanding variety of on-demand programming, including an array of new movies. Boasts the company’s Web site: “With on demand, programs start when you say so.”

Meanwhile, some of the very companies whose existence is threatened by the possibility of digital downloading are getting in on the act, too—or at least looking into the possibility. Though no formal plans have been announced, Netflix is reportedly considering the use of set-top boxes that would allow customers to download movies overnight, a move that could eventually eliminate the company’s mail-order system.

“This is the wave of the future, no question,” says Mark Harris, a representative from Movielink. “It’s not going to happen tomorrow or the next day. But before too long, this is going to be the dominant technology. This format will be the next step in the evolution of home-movie entertainment.”

• • • •

IN 1977, FEWER than 200,000 Americans owned VCRs. That same year, Andre Blay’s Video Club of America acquired 50 titles from Twentieth Century Fox studios with the intention of selling them for home viewing. By the end of 1978, Blay had sold about 250,000 cassettes. Not long after, a man named George Atkinson bought one Betamax and one VHS copy of each of Blay’s titles and began lending movies out of his Los Angeles store for $10 a day. And so the first video store was born.

At the time, studio executives scoffed at the notion of a movie rental industry. For many viewers, VCRs were still prohibitively expensive, a luxury item that only the wealthy could afford. But what Atkinson (who turned his little experiment into a 600-outlet franchise before his death in 1997) and other early retailers saw that the studio bigwigs missed was the fact that the cost of video machines would continue to decline, making home viewing—and renting—an attractive option for the middle class.

Flash forward almost 30 years and it’s hard to imagine a time when rentals weren’t an indelible part of the cinematic landscape. In fact, while box office receipts remain on a steady decline, despite the odd Pirates of the Caribbean-style smash hit, and multiplexes scramble to fill vacant seats, the demand for DVDs is at an all-time high. As the sound and picture quality of home theater systems continues to improve, more and more people are choosing to watch their movies from the couch.

This has meant years of booming business for rental outlets—both the franchise chain stores and the local mom-and-pops. But, as with any industry that is closely tied to technological advances, change happens quickly. And small establishments with limited resources are faced with a tough choice: evolve or go extinct.

• • • •

WHEN HE LANDED his first video store job in 1985, Jesse Collins was 17 years old, and the business of renting movies was considerably younger. He worked in the back, putting stickers on boxes and keeping things in order. He also swept the floor, occasionally worked the register and sometimes just sat around and talked about—what else?—movies.

Nine years and a wealth of experience later, Collins found himself co-owner of a tiny little operation in La Jolla that dealt mostly in what has been euphemistically termed adult entertainment. “At the time,” he says with a laugh, “we just called it porn.”

From there, Collins went on to manage eight different video stores in Southern California and New Mexico, including a pair of Blockbusters and a number of smaller, brick-and-mortar operations. He now lives in Mill Valley. He threw away his TV and says he doesn’t watch many movies—none that are made in the U.S.

But that doesn’t stop him from opining on the state of the industry. He believes video stores are headed for a big change.

“It’s coming, whether they like it or not. People with income to burn will always embrace new technology, even if that means sacrificing something they’ve always done like going to the [video store].”

Collins says he considered trying to get a job with Netflix, which he still sees as the industry leader, after he left the retail game. “The places that will make it are the ones that can blend the new stuff—mail at home, downloads—with the old business model. That takes money and a lot of ingenuity. Lots of small businesses are going to fold.”

Asked if he thinks there will come a day when digital downloads completely replace other formats, Collins is hesitant. “I don’t know. There are so many factors. There will always be that guy who still has his record player or even 8-track player, you know? In 2087, there’s still going to be some guy talking about how DVDs are the only way to go.”

• • • •

GARRISON LYON LOVES movies. He loves them so much that he’s got an active account at five different video stores. In Marin, Lyon picks up DVDs at Video Droid, Silver Screen, Blockbuster and the tiny Forest Knolls outpost Video West. When he’s on the other side of the Golden Gate, he stops off at the famous emporium Le Video, known for its huge inventory and expansive collection of hard-to-find cult and foreign films.

Lyon, a 71-year-old retired auto mechanic who says he fell in love with the cinema (and Bette Davis) at age 10, estimates that he watches between 15 and 20 movies a week.

“It’s an escape,” he says. “A chance to live these other lives for a couple of hours.”

Asked which genre is his favorite, Lyon shrugs. “I like ’em all. Depends on my mood. Sometimes you want to watch Bogie, sometimes you want to see a war epic, sometimes maybe a good comedy. Horror, when it’s done right, is always at the top of my list.”

Defending his choice to sometimes rent at Blockbuster—which many small video stores see as a bland, oppressive force in the industry—Lyon says, “They provide a service. They’re not as intimate, and they don’t carry a lot of obscure stuff, but hell, convenience has its place.”

Lyon says he’ll always use video stores, no matter what new technology comes along, because of the personalized service and the face-to-face interaction.

“I like to go in and ask what’s good, what people are renting,” he says. “The best places are the ones where they hire kids that know movies and like to talk about them. So if you ask for this one or that one, they won’t just find it for you on the shelf like some computer, but they’ll tell you other movies you might like or even steer you clear of something they know won’t tickle you.”

In the end, it may well be the Garrison Lyons of the world—loyal customers who like to talk movies—that save, or at least delay the fate of, the rental industry.

Downloading movies at home largely removes the middle man. It’s fast, easy and requires little or no interpersonal interaction. This is the appeal of the technology. But, in a sense, it is also its biggest downside.

“I guess some people want to stay home and never leave and have their movies beamed in Star Trek-style,” says Lyon, trying unsuccessfully to conceal a smirk. “Not me.”

• • • •

“ATTENTION FOLKS! VIDEO Droid is closing! Please make your final selections and bring them up to the counter...”

Only a few stragglers remain in the store’s various corners, still searching for that elusive title, as one of the rather tired-looking clerks bellows out his nightly proclamation. Another day, another several hundred movies rented and returned. Soon, the door will be locked, the rug vacuumed, the registers tallied and the lights shut off. Then tomorrow morning, the whole dance will begin again.

For how long? That, no one can answer for sure. Already, many small video outlets—in Marin and across the country—have been forced to close their doors, unable to compete in the crowded movie marketplace. And that pressure is only going to increase.

Places like Video Droid endure largely because of their unique character; because of the place they’ve carved out for themselves within their community; because they’ve engendered loyalty from a handful of committed patrons. That’s the recipe for success for every small business, really. They’ll never be as big and sleek as their corporate competitors; they won’t necessarily be able to keep up with the latest, greatest technology.

But they’re there, every day, ready to talk movies. In the end, that counts for quite a lot.

ILLUSTRATION BY MARK POUTENIS

ARCHIVES: More Pacific Sun Features

return to top