- The Washington Times - Friday, March 19, 2010

Make it a Netflix night. Or make it a Redbox night. Or make it an On Demand night.

But “make it a Blockbuster night”?

Dallas-based Blockbuster wishes it could press the rewind button and return to the days a decade ago when it was the giant in the video-rental business and widely seen as the corporate mega-chain forcing mom-and-pop stores out of business.

Blockbuster announced this week that it is suffering severe cash-flow shortages and is considering filing for bankruptcy. The company stock value tumbled to just 28 cents a share at the close of Thursday’s trading, two days after a Tuesday night regulatory filing that said the video giant was suffering “significant liquidity constraints” that, along with its debt load, “raise substantial doubt about our ability to continue as a going concern.”

And Blockbuster is not alone. Movie Gallery Inc., the nation’s second-largest movie-rental chain and owner of Movie Gallery, Hollywood Video and Game Crazy stores, filed for bankruptcy protection in February and has since closed 48 percent of its domestic stores. Almost all stores in the Washington area were closed in the process - the company Web site lists only two stores remaining inside the Washington Beltway.

Blame the new shape of the home-movie market. Film and video writers say the concept of a chain of video-rental stores has become an obsolete business model because of how technology has transformed the home-movie experience and will continue doing so.

“I think it’s all going to be handled online,” said critic Noel Murray, a contributing writer for the Onion AV Club.

Although he noted the success of DVD rental kiosks such as Redbox, Mr. Murray thinks the days of obtaining a physical disc when renting movies will end soon, replaced by movies streamed or downloaded directly to computers or television. He cited boxes such as the Tivo Premiere, a not-yet-released DVR system with a Netflix connection that gives access to movies with the touch of a remote as opposed to a drive to the video store.

Mr. Murray said he could not see any way for brick-and-mortar video stores to stay in business in the future, with the only exception being very small, independent shops carrying lesser-known, hard-to-find films. He said he expects outright purchases of discs to continue as a viable business.

“You’re going to be getting them through your computer, or you’re going to be buying,” he said.

Film critic Matt Prigge, a contributing writer for the Philadelphia Weekly, agreed that instant access to movies has become so attractive that rental stores are on their way out.

“That seems to be the path that we’re heading,” he said, though he added that he enjoys the experience of going to a rental store, particularly mom-and-pop shops, because they offer a personal touch and can offer hard-to-find titles.

“But it is so cheap to have a Netflix subscription, and you can get so much with it,” he said. “It seems that Netflix had the right idea, and Blockbuster was slow to capitalize on this.”

Nevertheless, a Blockbuster spokesman insists the company will remain, though not with the same model that barreled the company to dominance in the 1990s.

Randy Pruitt said his company closed 500 stores in 2009 and is planning to close between 230 and 275 more stores in 2010. The company owned about 3,500 stores in the U.S. in January, with franchise shops.

“As the economy and consumer tastes have changes, Blockbuster has certainly changed,” he said, adding that while the stores may become a smaller component in the future, “they will not go away entirely.”

Blockbuster has embraced a multichannel approach, Mr. Pruitt said - by setting up kiosks similar to those of Redbox around the country and by starting its own digital-download service, Blockbuster on Demand.

Mr. Pruitt also cited as an advantage the fact that Blockbuster has a window with some movie studios that lets it receive new releases 30 days before other rental stores.

Smaller rental stores, especially those with niches, remain hopeful that personal contact and human expertise will help keep them in business, and even think Blockbuster and Movie Gallery’s woes may help them.

One such store that specializes in hard-to-find films is Potomac Video, a chain of four stores in the Washington area.

Jon Francke, buyer and manager for the Potomac Video flagship store in the Cleveland Park neighborhood of the District, said his customers appreciate the fact that a store worker, familiar with movies, can guide them toward better films, whereas Web sites promote all of the movies available.

“Sometimes they get a much better movie than they would otherwise,” he said. “It think people recognize that value.”

Mr. Francke said the Potomac Video stores carry more foreign and independent titles, which their customers value, and there are actually still thousands of titles that have not been released on DVD, while Potomac stores carry movies on VHS.

“We have some very rare DVDs that Netflix doesn’t even carry,” he said. “We’ve always had a niche in the market.”

Business at the Potomac Video stores has improved since some of the larger rental chains in the area have closed down, Mr. Francke said.

Pat Laird, manager of Movies to Go, a locally owned movie-rental store in Martin, Tenn., said that although her business also has improved since the recent closing of the small town’s Movie Gallery store, it has been hurt by Redbox.

“Redbox does hurt; it really does. Because when you can get it for 99 cents, it would be the way to go,” she said. “You can’t really blame people.”

Ms. Laird said the store is trying to expand on its BluRay availability and acknowledged that movie-rental stores might become even less common in the future but she is also hopeful that personal contact will keep them in business.

“People like to come in and see a physical face,” she said.

Mr. Prigge agreed that the ability to talk to a human being about movie choices is appealing, saying that while Netflix can make movie suggestions based on other movies rented, the subjective realms of art and taste don’t conform perfectly to scientific computer algorithms.

He cited his rental of a film famous for midnight “worst movie ever” screenings, which produced suggestions he rent several limited-release art films by prize-winning directors.

“Based on my ‘interest’ in ‘The Room,’ I was recommended ‘The Girlfriend Experience,’ ‘Requiem for a Dream,’ and ‘Salo.’ How’s that?” he said.

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