Tuesday, November 22, 2011

Blockbuster is Dead, Long Live the Local Video Store

The aftermath of the closure of Blockbuster has been rather swift moving in Winnipeg. Most of the old locations have been grabbed by other retailers, restaurant operators and service industries. This is in stark comparison to the sad state of affairs in the States where so many Blockbusters stand empty.

Snap Fitness has been grabbing up many of the old locations. In the Charleswood Shopping Centre Plaza, Pet Valu has grabbed up the old Blockbuster location leaving their smaller spot in the mall. I think it will fill fast.

Farther up in the north part of the city, one of the Blockbusters is becoming Famous Dave's.

The Portage Avenue location near Grace Hospital remains empty.

Still, within one year, it is likely every empty Blockbuster will have found a new tenant.

But what of video stores in general? Has online crushed the bricks and mortar store?

Well, not quite. Simply put, Netflix does not carry everything and often lacks new stuff. The price maybe good for the service but you still need high speed Internet and delivery devices such as computer, cell phone, tablet or TV.

Netflix has come a long way but the truth is that some areas may never have fast reliable high speed Internet to receive high definition signals.

As for cable and satellite: Their selection of stuff on Video on Demand is limited, the price is high and the means to select what you want to watch is not the best.

So, what has the closure of Blockbuster really meant? Well, according to the Free Press, it has meant additional business for existing video stores. In short, local business has benefited the most.

In essence, it is Back to the Future for the rental business. Prior to the Rogers, Jumbos and Blockbusters, the video rental market was very local. For years, I used to get my videos at Video Zone on Academy Road.

There was a shakeout later in the 1980s and most of the smaller shops closed up shop.

Now the shakeout is the bigger shops.

What has happened is that the over capacity in the market has been removed.

While Netflix and other downloads are having a huge impact, the DVD market is still viable. The very cheap DVDs in Safeway are still not as plentiful or diverse as a well stocked store.

It is doubtful that a major industry player would look to do what Blockbuster did and have a national chain of stores. The margins are too low.

However, until highspeed downloading arrives everywhere and the price and selection are there, most people will not toss their DVD players out.

The market needs local players. A new business opportunity has arrived.

One suggestion to local business out there. Charleswood and Tuxedo need both a hotel, a video store and if we are to believe some seniors, A Sal's.


Anonymous said...

Two words: Swiss Chalet.

Winnipeg Girl said...

It will be interesting to see how the Best Buy machines in 7-11 stores end up doing.

Anonymous said...

Why rent when there is bittorrent?

John Dobbin said...

Winnipeg Girl: The kiosks in Safeway are cheap too but they carry so little stock and very little selection.

So far, nothing has opened in Charleswood and Tuxedo.

There are far more Mac's store where the machines are. The one in River Heights has a tiny parking lot. I think if it is popular, it will be chaos in that lot.

Anon 1: Movies at Swiss Chalet?

Anon 2: Bit Torrent also requires reliable Internet, a computing device and storage space. Risks include viruses as well as the police. Plus, if we all download free, content will stop as no one will make product for millions if there is no profit.

Reed Solomon said...

good old video cellar. porn, smokes, junk food, oh... and sometimes even movies.

Prairie Wanderer said...

Interesting, but the fatal flaw with renting is that the bottom fell out of it.

I can rent a new movie for 5 dollars, or own the same movie for 20. If I know it's a movie that I absolutely love, I'll probably see it in the theatre and then buy the DVD. No need to rent at all. If I wait 6 months, I can get that same movie for 10. Wait another 6 months and shop around, I can probably get it for 5, the same price for a new release rental. The $1 per movie non-new release rental is fine, but limited as much as Netflix is. Point is, Netflix costs you about the same as about 3 new release rentals a month. Not cost effective.

Rental stores remind me a lot of what happened to arcades 15 years ago. Home consoles and shifts in gaming and pricing made arcades obsolete. In another 5-10 years, I can't imagine there will be video rental store open in North America, at least not in its current format. Heck, there's barely any open now.

John Dobbin said...

PW: I agree that the purchase of DVDs has come down substantially. Part of that has been the Blockbuster effect that will no loner be present in Canada. They bought so much and sold so much at discount that retailers sold low to compete with stuff.

Changes to the copyright law are expected to raise the costs of DVD and downloads higher which convictions for piracy go up as well.

We'll see how this shakes out.