DVD Killed the Video Store

Your local movie-rental store, marked for death?

On the shelf at Nicollet Village Video, there's a note taped to the box of Inferno, a 1978 Italian horror flick. It says the movie contains violence against cats. "Do not support the mistreatment of animals by renting this film!" it reads.

"The least I can do is respect it," says owner Chris Becker of the message, which was apparently scrawled by some customer. Becker says he hasn't seen the movie, but if the charges are true, he sympathizes. "That's my best friend over there behind the counter," he says, motioning to the red hound vegetating on the carpet.

Becker scratches his beard. "The fact that this person went to the trouble of sneaking in the store and taping that there, the fact that they returned the movie instead of stealing it or setting it on fire, I respect that. It says something about our clientele."

If 'Beethoven' and 'Benji the Hunted' aren't back on the shelves, I'm going for the jugular: Nicollet Village Video owner Chris Becker and his staff late-fee collector
Michael Dvorak
If 'Beethoven' and 'Benji the Hunted' aren't back on the shelves, I'm going for the jugular: Nicollet Village Video owner Chris Becker and his staff late-fee collector

It also says something about the store. Becker, who looks like a mountain man and sounds like an ashtray, might be the rental-biz cousin of First Avenue manager Steve McClellan. He's just as staunch an independent--there wouldn't be a dog on the floor, or a note on the box, if he weren't. His shop's 35,000 VHS titles include foreign films, documentaries, pornography--anything you want. The 8,000-store Blockbuster chain, meanwhile, is notorious for carrying movies that have been specially reedited to earn an R rating. (For more on the straight-washed version of Y Tu Mamá También, see "Mamá Said Cut It Out".)

Still, I've recently found myself renting more at Blockbuster, where videos might as well carry a note saying: "Do not support the mistreatment of an artform by renting this film!" The reason is simple: digital videodiscs. Village Video doesn't carry them; Blockbuster does. And these days, that's all the difference I require.

Since last November, when Columbia TriStar announced that it had sold 11 million copies of Spider-Man on DVD in its first weekend, the new era has felt like a fait accompli. Lorelai on Gilmore Girls bought her parents a DVD player this winter; so did I. And even as audio commentary tracks rapidly wore out their welcome, the convenience of instant rewind didn't. (Viewers are now recording their own homemade DVD commentaries for download on the Internet--sort of the audio equivalent of a note on the box.)

At first, DVDs seemed like a good deal for indie stores. Where VHS rental tapes cost non-chains upward of $60 to buy from distributors, DVDs are cheap: around $20. But while Blockbuster and major competitors such as Hollywood Video and Movie Gallery have expanded, local shops seem tangled in fast-forward. Last year the holdings of bankrupt St. Paul-based chain Video Update were bought by Movie Gallery--and that was the good news. Video Update franchise stores closed, as did Movies on 169, Showtime Video in Blaine, Silver Screen in Virginia, and countless others. The small national chain Premier Video closed operations in Hastings and Mankato. The Video City stores are history. And a slew of Mr. Movies outlets were closed, or bought out by Blockbuster. (Eight years ago, there were 73 Mr. Movies franchise stores; now there are 18.)

Meanwhile, two revered collections of classic and foreign videos literally went up in flames: Home Video on Snelling burned down two years ago, reopening in September with an expanded DVD section but little of its hard-to-find older stuff. And the West Bank's Intercontinental Video couldn't rebuild itself from last year's fire, which destroyed an unparalleled selection of foreign titles.

Even Discount Video, whose 15,000 titles are often impossible to find elsewhere, feels the sea change. A longtime holdout for VHS, the Hennepin Avenue shop has at last decided to make the switch to DVD in Japanese anime (a genre released almost exclusively on DVD). Then there's Village Video, which also plans to start renting DVDs.

"I'm going to carry it for as long as it lasts," says Becker. "I thought by now that DVD would already be superseded by something more compatible with current television technology." He's talking about high-definition television and DVHS, a digital tape format that had major industry backing as recently as a year ago. "The marketing has been so amazing about 'the superiority of the disc to the tape' that I don't know whether tape will come back."

Becker shares with many indie storeowners a skepticism about the new format--and a reluctance to invest the capital required to make the transition. A former singer in one of Minneapolis's earliest punk bands, the Doggs, he compares the DVD invasion to the advent of CDs. "We were told how much better they sounded," he says. "But your ears told you differently: Vinyl sounded better. And the only way they enforced the thing was the industry stopped supporting vinyl. When somebody lies to you every time they open their mouths, how do you believe any word they say?"

Discount Video co-owner Chuck Hanson suggests that DVDs were devised to kill the rental market altogether. "They want to capture that money directly by selling the movie," he says.

He adds that the medium isn't exactly ideal for rental. "One reason we are very reticent to get into DVDs is that they are easily damaged, and a lot of them get thrown away," he says. "For these heavily capitalized companies, it's just the cost of doing business. But we don't have that margin."

Soon businesses will spring up to "resurface" damaged DVDs, Becker predicts. And if the format is difficult to rent, it's pointless to own: Most consumers don't watch movies again and again the way they listen to CDs.

Still, the video arm of AOL Time Warner is aggressively pushing the DVD as something to buy. According to Adams Media Research of Carmel, California, last year's sales totaled $12.26 billion, while rentals came in at $9.92 billion. At their current low prices, DVDs don't cost much more than my girlfriend's late fees, anyway. And unlike the old days of VHS sales, there isn't a "window" for rental shops before videos go on sale: Now you can buy a DVD the same day it becomes available for rental (though Blockbuster is lobbying the studios to change that).

"DVDs have ruined us," summarizes a former Mr. Movies franchise owner in the northern suburbs, who prefers not to use his name. "The plan going forward has been to sell DVDs new and compete with Wal-Mart. But that's just not practical for a small franchise."

In this dicey environment, rentals slipped 3 percent in 2002. And as I write, the comedic void known as Sweet Home Alabama is being heavily advertised in endless TV spots as a Valentine's gift. But somehow, I suspect those stuck with that DVD will wish they had rented.

The real question is, are stores going the way of VHS? Amid an explosion of alternatives--satellite, broadband cable, pay-per-view, illegal copies on file-sharing services like KaZaa--Netflix now offers an Internet-based rent-by-mail DVD service that Blockbuster has been forced to imitate. Last April Netflix opened a local distribution office in Minneapolis, and reports mailing 100,000 DVDs a month.

But Becker scoffs at the idea that online services could replace brick and mortar. "How close is the future where every title in here is available through a couple of mouse clicks?" he asks. "For that digital future that everybody says is coming, everybody's going to have to accept the model that Blockbuster is trying to push, the idea that only 500 films came out last year."

In point of fact, more than 750 films came out domestically in 2002, not counting many festival entries. But I can't help wondering: How will even the most dedicated shops carry them all?

 

If you want to know whether independent video stores are dying, ask the guy who picks over the corpses. Vil Vilinskis has been in the business of buying and selling rental inventories since 1985. Back when he got started, it was a boom time for small shops.

"You only had to have maybe 15 'turns' [or rentals] and you were making money," he says. "New releases would stay on the 'new release' wall because the demand was high and the supply was low."

The result was too many businesses. "It was like the '50s, with the gas station on every corner. Pretty soon the ma-and-pas started to feel the squeeze."

Enter Blockbuster, the Exxon of video rental. Co-founded by a Florida garbage magnate and eventually scooped up by Viacom, the company was ruthless with inventory, forever ditching the old model of keeping one copy of every release for future rentals. The logic: Why rent Meatballs once a year for 99 cents when you can sell it to a wholesaler for five bucks?

Blockbuster grew so powerful that it began making revenue-sharing deals with major studios, which allowed the company to carry more than a hundred copies of each title in stores with no acquisition costs. Other chains struck up their own agreements. But independent video stores were shut out. (The arrangement has become the subject of an anti-trust lawsuit against Blockbuster, filed in Los Angeles Superior Court on behalf of 250 independent video stores.)

Still, you'd think the DVD era would help independent stores capitalize on their strength--namely, still having one copy of everything. A shelf without 8,000 copies of The Wedding Planner is a shelf with room for good movies, right? But despite DVD's potential for opening the cinematic vaults, studios are slow to replace old films on VHS. "They're putting it out so piecemeal, it's going to take 20 years to get all this catalog on DVD," says Scott Prost, who owns Video Universe in Robbinsdale.

Vilinskis sees the back end of this dynamic. "I just bought out two independently owned Video Updates in the Twin Cities," he says. "On the new-release rack, DVDs represented 60 percent of the product, and VHS was 40 percent. In the catalog section, it was 98 percent VHS and about two percent DVD."

What kills stores is having to pay the same old high prices for tapes--maintaining an expensive back catalog while trying to compete in new stuff. Prost says most small operations don't have the capital for that, but he's managed by taking it slowly--there are now 5,000 DVDs among his 30,000 titles. In addition, Video Universe is buoyed by the one market (besides imported films for immigrants) that the chains can't seem to conquer--pornography.

Remember, porn is the reason VCRs exist in the first place--buyers pushed the technology at every step of development. Now enthusiasts make use of an arcane feature of some DVD players that lets you view scenes at multiple angles. The My Plaything series (with Jenna Jameson and others) allows viewers to choose what they want the star to "do," pushing movies into the realm of the video game.

Not that Video Universe, Village, Home, and Panorama, and other businesses are elaborate fronts for the adult room. GLBT, foreign, black-and-white, African-American (a.k.a. "urban")--you can find more of any of these genres at the neighborhood stores. And the neighborhoods need these shops, which are often alone in the industry for not requiring their customers to leave credit-card imprints.

"I'm on my ninth copy of The Mack," Becker laughs. "Because the people who think they're watching the lifestyle they want to embrace think they're making some kind of blow against the empire by stealing said tape. Prison movies are the same way."

Becker served time himself--two years for attempted possession of a controlled substance. "I had a wife that was sick and dying of MS," he says. "And I got talked into walking into a hotel room in Eagan where the only guy that didn't have a badge and a gun was me."

If the checkout clerks in blue shirts have a better story that that, I'll eat my Panasonic.

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