Brick and motar video stores need to go back to basics. I own a video store in a rural northern Virginia market. When I tried to compete with Netflix, just accepting the drop in volume as unavoidable, I followed the trend of chain video stores by raising prices and extending to 5 day rentals on everything, even going as far as to start my own in-store monthly fee, rental plan. I found that, first of all, It was a strain on my inventory and on my reputation for being well stocked. Secondly, for some reason, I found people didn't really rent that much more in bulk with 5 day rentals. Most importantly, I found that it put a gaping whole in my already sparse market. Not only by giving someone 5 days do you get them out of a renting rythym, but people tend to pass your movies around to their friends and family. The whole neighborhood watches your DVD for $4.
Instead, I scrapped my rental plans, scrapped my 5 days rentals, went to 2 days and 1 day on the brand new ones, and lowered prices well below those of Big box video stores. My late fees are only $1.50 a day, even for brand new releases. I'm even thinking of variable pricing even lower on weekdays. If they're just sitting on the shelf, you may as well make something.
For me, I just had to step back and look at what worked in my prime and what worked in the industy's prime. In the 80's and 90's, before sell through, you had to turn a copy 20 times just to break even on it. There was alot more volume back then because pay-per view, netflix, sell through and all that stuff wasn't really around yet. Yes, the rental demand isn't what it used to be, but remember, as a result, we're only having to pay about a fourth for the content that we used to. So, isn't it kind of arrogant for video stores, with all the technology and competition now, to try to rent movies to people for upwards of $5 now?....only needing to rent it 3 or 4 times to break even on it.
If we want the glory days and those busy Friday and Saturday nights back in our Video stores, we're going to have to beat technology and monopolies where they won't even try to compete with us, price.
Submitted by:
Rodger Visitacion 9/15/2006 3:35:32 PM PT
Location:
La Jolla, CA
Occupation:
CEO
This is just another healthy reminder that small may be the new big. Just because NYC and Hollywood dominate the media at times, doesn't mean that we should forget where the real action is - the long tail of cities, markets and micro-markets. I've also linked to this story from my blog: http://rodgerv.wordpress.com
9/18/2006 10:34:58 PM PT
Brick and motar video stores need to go back to basics. I own a video store in a rural northern Virginia market. When I tried to compete with Netflix, just accepting the drop in volume as unavoidable, I followed the trend of chain video stores by raising prices and extending to 5 day rentals on everything, even going as far as to start my own in-store monthly fee, rental plan. I found that, first of all, It was a strain on my inventory and on my reputation for being well stocked. Secondly, for some reason, I found people didn't really rent that much more in bulk with 5 day rentals. Most importantly, I found that it put a gaping whole in my already sparse market. Not only by giving someone 5 days do you get them out of a renting rythym, but people tend to pass your movies around to their friends and family. The whole neighborhood watches your DVD for $4.
Instead, I scrapped my rental plans, scrapped my 5 days rentals, went to 2 days and 1 day on the brand new ones, and lowered prices well below those of Big box video stores. My late fees are only $1.50 a day, even for brand new releases. I'm even thinking of variable pricing even lower on weekdays. If they're just sitting on the shelf, you may as well make something.
For me, I just had to step back and look at what worked in my prime and what worked in the industy's prime. In the 80's and 90's, before sell through, you had to turn a copy 20 times just to break even on it. There was alot more volume back then because pay-per view, netflix, sell through and all that stuff wasn't really around yet. Yes, the rental demand isn't what it used to be, but remember, as a result, we're only having to pay about a fourth for the content that we used to. So, isn't it kind of arrogant for video stores, with all the technology and competition now, to try to rent movies to people for upwards of $5 now?....only needing to rent it 3 or 4 times to break even on it.
If we want the glory days and those busy Friday and Saturday nights back in our Video stores, we're going to have to beat technology and monopolies where they won't even try to compete with us, price.