Video rental stores once dotted the landscape, providing not only
entertainment for area residents but jobs, as well. Now, thanks to streaming
video services involving both rental and sales, the video rental industry is
Revenue from video rentals from stores plummeted more than 39 percent in the first quarter 2012 to $305 million from about $504 million, according to a report from the Digital Entertainment Group.
There are less than six stores left in Butler County.
In contrast, revenue from digital streaming was up 545 percent, to $549 million, from about $85 million in the year earlier period, and total digital revenue rose more than 74 percent, to $1.2 billion from about $699 million.
The closing of video rental stores has sent employment statistics reeling for the industry, according to the Bureau of Labor Statistics.
The number of people employed tumbled from 1,046 in the industry in 2005 to just 637 by 2010 in the Cincinnati-Middletown Metropolitan Statistical Area, according to the bureau.
That trend was echoed in Ohio, which plummeted from 5,696 in 2005 to 2,579 in 2010 and nationwide, where there were 143,799 people in 2005 but just 60,246 by 2010.
The erosion of the video rental market has meant fewer Blockbuster stores and the disappearance of chain stores Movie Gallery and Hollywood Video, as well as locally owned mom-and-pop stores.
Sue Hezlep of Middletown said her family switched from video rental stores about two or three years ago, opting instead to check out movies from the Middletown Public Library or from Redbox, either for free or for significantly less than video rental stores.
"We never pay more than $1.06 per movie even when we don't have rewards," she said. "With this economy, it doesn't make sense to rent from Blockbuster."
Unlike Blockbuster, which has lost market share in the past five years, Family Video has more than 700 stores in 19 states and plans to open more, according to district manager Mike Noga.
Revenues at the privately-owned business, which has locations in Hamilton, Fairfield and Oxford, are bucking the trend of diminished returns because since its inception it's offered free children's movies, sports and fitness videos, educational movies and thousands of two-for-a-dollar movies, plus deep discounts on many items, Noga said.
"At some locations, we're seeing if not record, near record, signing up of new members, which is great for us," he said. "That's kind of the life blood of our industry."
But industry experts say stores like Family Video are the exception to the trend.
Consumers are forgoing video rental stores in increasing numbers because of the ease-of-use associated with subscription based video-on-demand, especially Netflix, according to Sean Bersell, vice president of public affairs for Entertainment Merchants Association.
"Netflix took a significant bite out of brick and mortar stores when they came into the industry and have grown in market share ever since then," Bersell said of the company, which has 23 million streaming members worldwide.
Kiosk rental machines positioned outside high-traffic areas such as grocery stores and big box retailers also make for easy access and put a sizeable dent in the in-store business model, Bersell said.
"The kiosk in many ways has been the biggest competitor to a traditional brick-and-mortar store," Bersell said. "We're seeing that those kiosks, which were non-existent in 2003, are now a significant part of the industry in terms of the rental market share. They have just come on like gangbusters."
That popularity is evident at rental kiosk leader Redbox, which grew from 15,000 kiosks in August 2009 to more than 30,000 today.
In contrast, Blockbuster stores have been reduced by more than half. The once dominant video renal chain went from 3,600 U.S. stores in third quarter 2009, to about 3,000 by the time the company filed for Chapter 11 bankruptcy reorganization in September 2010, according to EMA.
The chain, which was bought last year by DISH Network, had operated 1,500 stores nationwide before an announcement in March that DISH would close more than 500 of its 1,500 Blockbuster stores nationwide. That includes its location at 5501 Liberty Square Drive just off Ohio 4 in Liberty Twp., which is scheduled to close June 17, according to store officials.
Video store chain Movie Gallery liquidated and closed all of its roughly 2,700 Movie Gallery and Hollywood Video stores in 2010, according to the Entertainment Merchants Association.
While those who rent movies from video stores get them 28 days before kiosk and subscription DVD and streaming formats, some people don't mind the wait.
Donna Mollaun of Fairfield said she prefers video-on-demand streaming to kiosks and video rental stores because of the convenience.
"It's more expensive than Redbox, but I don't have to spend gas money to get it and return it," Mollaun said. "I just select the movie on the TV screen and I can make it will appear on multiple TVs in my house. There are no late fees."
That sentiment is part of a significant market shift in consumer spending nationwide.
Subscription rental services accounted for 50 percent of the physical rental market starting in 2011 and look to continue that trend through 2015, according to projections from IHS Screen Digest show.
Consumer spending at traditional rental stores, once dominant in 2005 at 81 percent, was projected to drop to 22 percent in 2011 and to 13 percent by 2015.
Spending at consumer kiosks is projected to grow from 28 percent to 36 percent by 2015.
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