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Reasons for the Rental Revival

15 Jul, 2005 By: Thomas K. Arnold

Pardon a few bursting buttons, but I predicted this might happen: The video rental market, after more than a year of decline, seems to have leveled out and, at least for the last three weeks, has been up from last year.

What's fueling the rebound if, in fact, trends hold true and there is one? My guess is rentals have fallen about as far as they can go, at least for a while, and rosier times lie ahead.

Why? Many reasons, really. For starters, summer is here, and that means the kids are out of school. It's only natural Mom's going to rent more videos and games for the kids, now that there are no more early bedtime school nights and organized sports every weekend.

Secondly, the early adopters of DVD have now had their players six to eight years and have probably built up sizable collections — perhaps too sizeable, as in my case, for their mates to handle. “You bring home another DVD and you're dead. And as for that stack in the laundry room, you'd better do something with it — and fast!” That's what I got recently, and if even a small percentage of other early adopters share my pain, then you can see what's happening in the market: We're running out of room, so we're a lot more selective in what we buy. The option, then, is to rent.

Another reason rentals are up might be that the latest wave of DVD adopters is older folks. They waited this long to ditch the VCR and buy a DVD player, so they're hardly your most active, progressive home entertainment consumer. Why, back when they were last active, VHS was still king, and the overwhelming habit was to rent rather than buy. Now these folks are back in the market and, well, old habits die hard.

A fourth reason for the resurgence in rental: A spate of so-so theatricals have been making their way to video in recent weeks. These are movies that didn't pull people into theaters; most people probably though it over and decided to wait until the film came out on video. Now that it has, there's no overwhelming purchase intent, as there would be for a theatrical blockbuster everyone saw, everyone loved and now everyone wants to own. Again, rental enters the picture.

Take Hide and Seek — an OK thriller with a less-than-impressive box office take of $51 million. According to Home Media Retailing's market research department, the film pulled in more than $14 million in rental revenue its first week in stores — more than several recent blockbusters made their first week out, including The Pacifier ($112 million theatrical gross, $11.6 rental revenue its first week on video) and Hitch ($177 million box office, $10.8 million in first-week rental dollars).

Whatever the reason, it's refreshing to hear some positive news about our business for a change. With so much talk about the DVD market reaching maturity and sales starting to soften, it's gratifying to hear that the so-called “dinosaur” component of home entertainment, video rental, is alive and kicking.

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