
Internet Kills the Video Store - danso
http://www.nytimes.com/2013/11/07/business/media/internet-kills-the-video-store.html?ref=technology&_r=0
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programminggeek
Internet didn't kill the video store, Blockbuster killed itself at the dawn of
DVD. When DVD was coming out as a new format, Blockbuster got greedy and when
the movie industry wanted the same profit sharing deal, Blockbuster was the #1
revenue source for Hollywood, so Blockbuster wanted a better deal.

Major movie studios decided to then make better wholesale deals with Wal-Mart
driving the price of movies down from $20+ to $5-15. At the same time renting
a movie from Blockbuster was in the $3-5 range and Blockbuster famously made a
ton of money with late fees. Within a few years Wal-Mart was Hollywood's #1
revenue source.

Basically, Blockbuster had a near monopoly and used it to piss off both their
suppliers and customers. Over time, Netflix, Redbox, and others have taken
business from Blockbuster, but most of that was Blockbuster pissing it away
more than it is the internet "disrupting" Blockbuster.

Blockbuster is a case of self-sabotage.

~~~
HelloMcFly
That just sounds _a lot_ less plausible to me, like an explanation given if
someone had asked for a devil's advocate position. I find it hard to believe
that opting not to pursue a more lucrative deal for themselves with Hollywood
studios in the DVD era would have significantly impacted Blockbuster's
trajectory.

Wal-Mart would have likely negotiated very similar deals they ultimately got
regardless of Blockbuster's actions (it's not as if Wal-Mart didn't sell
movies up to that point anyway, or squeeze suppliers for great deals).
Blockbuster's money-maker was always new releases (and fees on them), the
price of which stayed around $20+ to buy on release anyway. Did they piss away
their "near monopoly"? Most certainly, but I think it was by not adapting with
the times rather than a commitment to late fees and driving Hollywood to Wal-
Mart.

Blockbuster made sense in a non-automated DVD world, Wal-Mart or not. They
didn't make sense in a digital (Netflix) or automated (Netflix, Redbox) world.

Just an armchair observer though. I could be wrong. But the "obvious"
explanation in this case really does seem a lot more plausible.

~~~
programminggeek
Yes, except that before DVD's, tapes were routinely $20+ and DVD's dropped
below $15 surprisingly fast and when you figure for inflation, that they are
still around $15 means they are selling the same product for considerably
cheaper than VHS did (and for a while in higher volumes).

I totally agree that digital hurt Blockbuster, but Blockbuster was in a
terrible place before the world went digital streaming. Netflix DVD mailers
basically stole millions of customers on the promise of "no late fees", which
was clearly a huge customer complaint with Blockbuster.

Blockbuster's decline started before streaming was big and Blockbuster did a
reasonable job to try and keep up with Netflix in terms of building up their
own mailing business, digital rental business, kiosk business, etc. but the
fundamental problem with Blockbuster's business is they needed to rent things
for $5 a pop to pay for the revenue sharing and rent.

Redbox and Netflix built their business without paying as much or anything in
revenue sharing and a completely different operational cost structure. The
only way Blockbuster could have stayed afloat is to keep happy customers, but
they pissed too many people off too many times by being too expensive and
ripping people off with late fees. Happy repeat customers who are willing to
pay a premium for awesome service will keep many businesses alive, but
Blockbuster lost happy customers and didn't have awesome service.

Internet played a part, but let's not throw away the business fundamentals
with the bathwater.

------
logn
I'll miss Blockbuster. They were a staple of my childhood and I have many fond
memories of them and the film nerds who used to work at their stores. I think
they could have held on longer. I've never really liked Netflix mail service,
given the few days of delay. And their streaming selection is still limited.
Plus, I don't have cable/satellite TV, so it's sad to me that I think there's
still an unserved segment of customers out there. But with current new DVD
prices ($4 - $12) I don't see a compelling reason to rent them, and places
like Target and Walmart will probably enjoy selling them for quite some time,
like how BestBuy sold a good selection of reasonably priced CDs for years in
the face of Napster and new online distribution, while competing CD stores all
went out of business.

~~~
swalsh
Have you tried Amazon? If you're prime there's a big selection of videos for
free, but for those not free there's almost always a streaming rental
available for an average of $2. I've found myself using the service quite a
bit recently when I want to watch a specific video (as opposed to netflix when
i just want to find something to turn on)

------
famousactress
" _Dish... said it still sees value in the brand name and will use it in
limited ways._ "

I can only imagine that means licensing the logo for use in movies set in the
90's.

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VLM
Is redbox a national thing? Interesting how the article blamed solely the
internet and not redbox. Some parts of the city, I think there are more redbox
machines than soda machines.

~~~
protomyth
Redbox in McDonalds and Walmarts are probably the bigger reason for
Blockbuster's demise. Its amazing how busy those kiosks are.

~~~
aryastark
I'm a bit amazed they work.

In a Blockbuster, you can have a few dozen people looking around at once for
the right movie to watch. On Friday and Saturday nights, they were often
packed. But a kiosk, you have to wait for the other person to finish browsing
and purchasing. Seems like they work precisely because the demand is just low
enough that there is not too much contention for any one kiosk.

~~~
protomyth
The folks at RedBox seem to understand that and have made it very quick to get
what you want and leave. Plus, it takes very little time to go over the
available movies.

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ISL
Scarecrow Video in Seattle hasn't shown any sign of slowing down. Almost any
movie ever made, rented to you by someone who's probably watched it.

It's the Powell's Books of movies. I'm impressed every time I walk in and
every time I talk with someone who works there.

[http://www.scarecrow.com](http://www.scarecrow.com)

~~~
jeff_tyrrill
Scarecrow recently posted a letter saying they are in danger of closing:

[https://www.scarecrow.com/40/9681/scarecrow-video-needs-
your...](https://www.scarecrow.com/40/9681/scarecrow-video-needs-your-
help.html)

~~~
nitrogen
Sounds like the kind of thing that some giant arts endowment should be
supporting, if paying customers can't keep up with costs.

------
bluedino
I blame Blockbuster's management. It's funny as all the other video stores
have died off, Family Video continues to add stores and is doing fine.

~~~
danso
Ha, haven't seen one of those in awhile, but what you say is true:

[http://www.sj-r.com/top-stories/x766862973/Family-Video-
pres...](http://www.sj-r.com/top-stories/x766862973/Family-Video-president-
sees-continued-growth)

They have been growing at a rate of 3 per month, and have presences in both
large and midsole regions. One of their successful strategies apparently is to
sell pizza at their locations

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pyrocat
Was anyone else expecting a (2007) after the article title? I mean, did this
even need to be written?

~~~
graeme
A lot of people on Hacker News forget that they're on the forefront of
technology. DVDs remain widely used, even now. I doubt they'll last too much
longer, but your experience as a adopter of new tech is not universal.

I've shocked some people in my social circle when I mention my macbook air has
no DVD drive. They still use them. And my Dad goes to the local video store to
watch movies on his TV. It will be a long while before he switches to an
option that lets him watch Netflix on his TV screen, and he won't watch movies
on a computer.

~~~
acuozzo
I'm a self-described cinemaphile, so I tend to purchase Blu-rays and DVDs of
movies rather than streaming them. I've yet to see a streaming service that
offers commentary tracks, alternate audio tracks (e.g., original mono mixes),
"Making Of" featurettes, etc.

Do you know of any?

~~~
L_Rahman
Not the parent comment, but thought I'd answer any ways. Despite lots of
looking around, I too haven't been able to find a streaming offering that
comes close to competing with a well constructed Blu-Ray release.

My collection is built largely thanks to Barnes and Nobles' 50% off Criterion
sales.

------
bluedino
Old-fashioned video stores cater to markets that streaming services don't.

There's the low-income who don't have a device that can stream. There are
those who don't have internet access for whatever reason. People who don't
have a credit card to sign up for Netflix. The same kind of people who stand
in line to pay their cable and phone bills in person. Then you have people who
just don't embrace technology.

~~~
acuozzo
What about cinemaphiles who embrace special features that often aren't
included with streaming services, such as commentary tracks and "Making Of"
featurettes?

~~~
dangrossman
Eventually, that sort of thing will move to the digital versions too. It
already is on some blockbuster titles. A month before Iron Man 3 hit store
shelves on DVD/BR, it was available for download online, and _only_ as the
$20+ version with the bonus content.

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hitchhiker999
This is something that should have happened around 2005.

~~~
camus2
> This is something that should have happened around 2005.

what is "something" ? people losing there job?

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Mankhool
Every city benefits from a video store with a deep catalogue spanning all
genres - including videos that are simply not available to
rent/stream/purchase anywhere online because of licensing issues or copyright
owner greed. I understand the Top 100 video stores closing. They are
dinosaurs. But the long-tail of online content is not yet long enough to kill
the video store completely. Yet.

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TrainedMonkey
Newsflash: Medicine kills disease. Seriously medicine killed a lot of
professions associated with health. For example nobody needs leaches anymore,
all those people that were growing, distributing, and selling them.

What happened is Blockbuster failed to take advantage of the economic
opportunity internet presented and got left in the dust.

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brianbreslin
NCR sold off the blockbuster kiosk business (NCR had licensed the name for
Blockbuster Express) to redbox a year or so ago. I remember the last time I
went to a blockbuster (maybe 2008) and the employees were CLEARLY not happy to
be working there.

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zwieback
Good riddance. I'm normally fairly sentimental when it comes to technology
(still have the turntable of my long-gone teenage years) but I've always hated
everything about going to video stores.

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grecy
I look forward to the day when the same thing happens to Music Labels, and
with any luck eventually Movie Studios.

------
EGreg
Someone should make an updated song to "Video killed the radio star"

~~~
nitrogen
It almost seems like nobody got the reference. So, not only did Internet kill
the video store, it also killed the radio-star-killing video song.

