Video Stores Struggle to Stack Up
Blockbuster's quarterly loss is further evidence of the industry's anemic state. But executives see an evolution, not extinction.
By Lorenza Muñoz, Times Staff Writer
....Evidence of the industry's anemic state came Tuesday, when bellwether Blockbuster Inc., by far the biggest video-rental chain, reported a second-quarter loss of $57.2 million because of the elimination of its late fees and costs to fund its fledgling online rental business. The Dallas-based chain, which has posted annual losses every year since 1997, earned a $48.6-million profit in the year-earlier quarter. Sales in the latest quarter slid nearly 2% to $1.4 billion....
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Not helping matters is Hollywood's anemic box-office performance this year, which portends more sluggishness. Recently, Blockbuster's top rival, Movie Gallery Inc., also warned of difficulties. Even smaller retailers are feeling the pinch....
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It wasn't long ago when video stores minted money. The proliferation of videocassette players in the 1980s made visiting the video store a weekend ritual for a generation of movie buffs and families....Enter the low-priced DVD. Introduced in 1997, the DVD became a hot item for mass merchandisers such as Wal-Mart Stores Inc., Best Buy and Target, whose cut-rate prices persuaded customers to buy movies for just a few dollars more than they could rent them....
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Another threat came in 1999, when Hastings launched Netflix, which rented DVDs to people over the Internet, delivering them via mail and nixing the late fees that stuck in the craw of video store customers....(O)ther technologies — video on demand, Internet downloading and pay per view — that make ordering a movie as easy as clicking a remote threaten to further undermine the video store....
http://www.latimes.com/business/la-fi-vidstore10aug10,0,1045133.story?coll=la-home-business#Scene_1
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