Monday, February 14, 2011

How to Save a Video Store in the Digital Age


You don’t save it. You simply build around what online can not offer people, a sense of community. The experience of going to the video store, picking out movies, chatting with neighbors or strangers and standing inline to pay for it with your buddies on a weekend nights, or during the holidays are emotional memory makers. Sure it might be cheaper to order movies from Netflix but where is the love.

Blockbuster and many others like it are now struggling as their audiences opt for cheaper, more convenient options, many of which, like Netflix Inc. The rise of Netflix, and especially its newer streaming movie service that lets subscribers watch videos instantly online, has put growing financial pressure on independent stores like Le Video around the U.S., even as chains like Hollywood Video and Blockbuster shut many locations. For the past year, Le Video has operated in the red, and it broke even for the prior seven years only because its founder and owner, Catherine Tchen, didn't pay herself anything, she says.

My suggestion is to reinvent the idea of going to see a movie. In this case, rent a movie. No matter if Netflix owns 99% of the rental business, people will still go to movie theaters, people will still go to concerts, sports events, trade shows. Nothing beats face to face social interaction. Blockbuster is likely to put it’s self up for sell. According to wsj, earnings before interest, taxes, depreciation and amortization dropped below $100 million in 2010, down from $150 million the year before. And the number of Blockbuster's by-mail subscribers dropped to 1.2 million at the end of October from 1.5 million the year before. Netflix, by comparison, has 20 million subscribers. One way is to create a mini movie theater experience. Get rid of most of the physical inventory of movies (DVDs, VHS) add furniture, gaming systems, and turn it into a bar like experience.

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