As Blockbusters Close, Indie Rental Stores Scramble for Business

Indie stores offer rare titles and VHS copies of films Netflix and Blockbuster don't offer.

A Blockbuster video store is seen on Nov. 6, 2013, in Miami, Fla. Blockbuster announced that it will close its 300 remaining U.S. stores by early January.
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How times change. Twelve years ago, a group of 150 independent video store owners sued Blockbuster for what they thought was monopolization of the industry. Today, the video rental chain is preparing to close down its remaining outlets. As the rental industry shrinks, the tenacious video rental stores still standing are doing everything they can to stave off their own demise.

While the slow decline of major rental chains has been good for independent video stores, it's a temporary boost as the rental audience shrinks, shifting to subscription and online streaming services.

"A lot of Blockbusters in the city have closed, and people came in saying, 'I used to rent there and now I want to rent here," says Mark Steiner, a buyer at Scarecrow Video in Seattle. "That audience is shrinking."

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While brick-and-mortar outlets were once the place to rent a movie, they are now only a minority of the business. Brick-and-mortar outlets have only a 24.3 percent market share of the movie-and-video-game rental market (Blockbuster itself accounts for 19 percent of the market), compared to 49.2 percent for kiosk rentals like Redbox and 26.5 percent for subscription services like Netflix, according to a report from market research firm IBISWorld. Those figures do not even take into account online streaming, which would make the market share even smaller for today's independent video stores.

Even for a large rental store with loyal customers, times are tough. Scarecrow bills itself as the largest independent video store in the country, boasting over 117,000 titles, but a deep catalog isn't enough to keep profits up.

"The last six years, we've experienced a 40 percent drop in revenue. Sales are OK, but rentals are way, way down," says Steiner. "We're fighting to survive."

Another large store finds itself struggling after being in business for more than three decades.

"It's pretty much month-to-month at this point in terms of the revenue. It's gone down precipitously in the last year," says Mark McNevin, general manager of Potomac Video Center, a Washington, D.C. store that carries 50,000 titles.

As these stores die, an important community institution is dying as well, say the workers at these stores, who tend to be cinephiles themselves. Though anachronistic, one of the modern independent video store's key virtues is in stocking VHS movies, says McNevin, who also teaches screenwriting at American University and freelances on movie crews. He explains that many films originally released on videotape were never transferred to DVD, sending customers to his store looking for cult films that they can't find elsewhere.

Of course, part of independent stores' unique offerings have often been found in the euphemistic "back room." Blockbuster initially set itself apart in the industry eschewing the X-rated offerings and marketing itself as mainstream, says one expert. However, independent video stores' very uniqueness – racy movies aside – is what is helping them to survive now as Blockbuster shutters its stores.

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"The family-friendly-ness of Blockbuster was an important part of its identity; not just the lack of adult video, but the fact that the stores were clean and brightly-lit, with wider aisles," writes Josh Greenberg, director of the Allen P. Sloan Foundation's digital information technology program and author of "From Betamax to Blockbuster," in an email. "At the same time, that meant a homogenization that meant less access to less-mainstream videos, which left a clear market niche for the 'indies'."

The independent stores may carry the latest big-budget superhero epics, but they also try to find ways to make themselves indispensable. McNevin, whose store is down the street from a movie theater that he says "very much caters to the arthouse crowd," says he makes a point of knowing and catering to that audience.

"Our biggest section is probably our BBC and British stuff," says McNevin. "Again there's a lot of stuff in there that's not easy to come by."