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Like It's 1999

11 Oct, 2005 By: Stephanie Prange

I'm not ready to party, but it's certainly looking like it's 1999.

I haven't seen this much rental doom and gloom since that fateful year, in which the rental business turned so rancorous that indie members of the Video Software Dealers Association filed a lawsuit against fellow member Blockbuster, as well as the major studios. There had been a sea change in the rental metrics, putting numerous indies out of business. The suit centered on antitrust issues and indies' inability to compete with the new deals Blockbuster had brokered with the studios (it later became moot in light of low DVD pricing for all). This time around, Blockbuster itself is under fire from sellthrough goliaths and online rental innovator Netflix, finding it hard to compete with them as its in-store rental comps continue to drop.

In 1999, DVD was just beginning to take off as a new format, but it hadn't yet arrived as the low-priced rental product of choice, giving rentailers a boost on margins and a new profit center in previously viewed sales. Likewise, this year, we await another new format to emerge, whether it be HD DVD or Blu-ray Disc, to revitalize the business.

While 1999 saw the box office revenue grow more than 7 percent from the year before, the actual attendance numbers sank 1 percent for the first time in four years; they fell another 3 percent in 2000, according to boxofficemojo.com. This year, we're experiencing an even more precipitous drop in revenue and attendance. Interesting enough, the top movie of 1999 was Star Wars: Episode 1 — The Phantom Menace. The top movie of 2005 so far: Star Wars: Episode III — Revenge of the Sith.

What happened after 1999? We saw a surge in entertainment spending that surprised the industry. Let's hope it's 1999 all over again.

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