MARCH 31 | If remaining independent video rentailers are anything, we are survivors. We survived a crowded marketplace, with video stores seemingly on every block, then chain video stores with their copy depth and other chains with low-cost sell-through DVDs. Now, due to new technology, we are facing increasing fragmentation of our market.
How does the independent rentailer survive this new challenge? How do we compete with online subscription services, increased pay-per-view options, video streaming and downloading? To get answers, we must understand our consumers, what we provide them and why.
Consider online subscriptions. Let these Internet companies have the customers who watch three movies per week. They lose money on them.
They make money on the customer who watches three movies per month. If you have lost that customer, get them back by promoting the advantages of a la carte rentals.
We can promote the idea of instant gratification. There is no advance planning required to come to the video store. In a short time, the customer can choose a movie from thousands and have it playing on their TV.
Another disadvantage to subscriptions is the monthly billing. We can advertise that the consumer watches what he wants, when he wants, and he only has to pay for what he watches.
Many bricks-and-mortar rentailers are also now offering in-store subscriptions to be competitive. The advantage to the customer is that they are not required to manage a list and be dependent on the mail.
In the end, I don’t believe the growing popularity of online subscriptions is about the lack of late fees. It is about convenience, selection and price.
As new services increase the selection and flexibility of movies available to watch via cable, satellite and digital video recorder, the video rentailer’s competition with TV will become more fierce. But the video store still has the advantages of selection and timing. We need to make sure the customer is constantly aware of this.
When movies are available on “on demand” TV, tell your customer that you have them too. Consider competing against the on-demand pricing, and promote the same movies showing on demand. How about a section in the store with signage saying something like “Watch on cable for $X, or rent for only $X”?
Video streaming and downloading also may eventually take a share of our customers. They require more hardware at home, however, and a commitment to the new technology.
Though we might have some customers willing to change to these technologies, most of our customers are not early adopters. Right now, it is too early to tell which, if any of these specific initiatives are going to affect us the most.
Each store has a long list of customers—their names, addresses and the kinds of movies they like. I am convinced the savvy rentailer will find ways to partner in the online world, using the existing customer base as an asset.
This all adds up to a lot of competition in a market we once shared only with movie theaters. As long as there are traditional renters, we should continue to provide the a la carte rental in the most competitive way possible while finding innovative ways to compete against the new and emerging competition. The use of well-targeted advertising and in-store promotions are necessary to keep the advantages of the video store forefront in the customers’ mind. Knowing and focusing on our customers and their needs and desires is the key to success.
Tom Paine is owner of six-store DVD Now, Redmond, Wash.
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