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TK's MORNING BUZZ: Those Who Give Video Rental Five or Even 10 More Good Years Are Selling the Business Short

1 Oct, 2001 By: Thomas K. Arnold

It's a suspenseful time for America, and yesterday's announcement by Attorney General Ashcroft that there's a strong possibility there will be more terrorist attacks is keeping everyone on edge.

The conversations I've had recently with customers at video stores tell an interesting story. I spoke with one gentleman in his 40s who rents about 10 movies a month, "whatever's new." He's a blue-collar type and he told me going to a video store was part of his routine, like getting gas, going to work and "smoking cigarettes," he said with a laugh.

I met another couple, both of them young white-collar types who typified what we used to call "yuppies." They said the terror scare has made them want to stay home more, and that means more rented movies. "We just don't feel like going to the movie theater," the man told me.

These and many other conversations I've had recently with consumers -- both in the video store and during other activities, like the Indian Guides camping trip I went on over the weekend with my 5-year-old -- are beginning to make me wonder whether video rental is ever going to go away entirely.

I've always told retailers they have a lot more time left than they might think, that video-on-demand will complement rather than destroy their business, when and if it gets here, and that at least for awhile the two can co-exist peacefully.

Analysts like Tom Adams and others say the same thing -- there's a lot of life left in video rental, and it will be years before we start seeing a decline in the rental business.

I'm beginning to think those who give video rental five or even 10 years are selling the business short. Renting a video seems to have become an integral part of popular culture, and if there's one telling indicator it's that the arrival of DVD did not spell the beginning of the end of the rental business. DVD, you may recall, was supposed to be for sellthrough only; those who didn't want to buy movies on disc would gradually shift to pay-TV services, particularly as we approached true video-on-demand.

Well, that hasn't happened, has it? A bull market in DVD rental has emerged, and despite satellite systems offering near-video-on-demand and true VOD coming soon over the Internet, there's still an awful lot of people who don't mind getting into their cars, driving down to the local video store and renting a handful of movies, either on cassette or disc.

Indeed -- the rental business is up; according to some retailers, by as much as 20% over last year.

Video rentailers may be fighting off rumors of their impending doom on one hand and fending off their own bouts of paranoia on the other, but their customers are taking things in stride.

They don't seem to bother with the question, "How long will the rental business last?"

They're too busy renting movies.

Comments? Contact TK directly at:TKArnold@aol.com

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