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Want More Proof that Rental Is Dead? Go to the Flea Market

1 Jun, 2004 By: Holly J. Wagner

Two topics that come up frequently in The Buzz are guaranteed to bring a hail of angry — or at least perturbed — letters: 1) VHS is dead and 2) Rental is dead.

I'm bracing for a round of slings and arrows for saying so, but methinks the rentailers doth protest too much. Face it, folks, rental is down this year. Blockbuster says 10 percent for the first quarter at its stores; Video Store Magazine Market Research says 16.5 percent across the industry. Other estimates range in-between.

I know, I'm jaded. I work in the industry like most of you, so I have access to a lot of product, and I know I was fairly early in the technology timeline to jettison VHS. I am in a bustling metro area that may not precisely represent what is going on nationwide. But this weekend's stroll around the flea market made it clearer than ever that nobody, even bargain hunters, has much interest in VHS anymore. Even at rock-bottom prices, they just sit there. But across the lot, stands selling used DVD at prices ranging from $7.99 to $13.99 each looked like little beehives with all the folks buzzing around — and buying. (One stand, by the way, was selling off rental stock. You could tell because of the hand-numbered stickers on each case. And they sell almost everything they bring to the market each weekend.)

It's funny how most of the letter writers assailing the “rental is dead” statement concede that they are surviving (and some are thriving) on PVT and used, not rentals. Even over on the VSDA discussion boards, people are talking exit strategies. The writing is on the wall, and it's discount. True, the craftier specialty dealers are coming up with ways to stay profitable and stay in business. But those new strategies are not based on rental or VHS. For the most part, PVT and used DVD are keeping businesses afloat.

Don't get me wrong, I'm all for it. I'm glad to see honest businesses stay in business. I just wonder about the Pollyanna mentality that says people will keep renting for $4 a night or even $5 for five days when they can buy for not much more and, in many cases, rent for much less.

I couldn't help notice an article in The Citizen News (Atlanta) that quoted a Blockbuster executive, Terri Murray, saying the chain had converted “one of its ‘most profitable’ stores to a Movie Trading Company. I'm guessing that store was one of the larger footprints in the chain, and I expect to see those stores that are big on square footage targeted for conversion first. Hit-driven rental stores just don't need the real estate.

I don't think the industry can keep going as it has for much longer. It may keep going, but it won't look much like it has in the past.

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