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Topic: Blockbuster Video-Rental Chain Will Shut All U.S. Stores

Justin Hamaker
Film God

Posts: 2253
From: Lakeport, CA USA
Registered: Jan 2004

posted 11-13-2013 01:10 AM

For streaming content, I've found the Roku players tend to work better than the players built into TVs and BluRay players. The Roku boxes seem to connect faster, buffer quicker, and play quality content faster. I don't know how they compare to a PS3, but they are far better than the Wii.

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Joe Redifer
You need a beating today

Posts: 12859
From: Denver, Colorado
Registered: May 99

posted 11-13-2013 01:22 AM

quote:
Charge the hell out your credit card!

What if I cancel it first?

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Terry Lynn-Stevens
Phenomenal Film Handler

Posts: 1081
From: Toronto, Ontario, Canada
Registered: Dec 2012

posted 11-13-2013 06:54 AM

quote: Justin Hamaker
As far as priced to own VHS, didn't that start with the release of Top Gun which had a Pepsi commercial on the tape? I was only 12-13 when that happened, but I seem to remember it was priced about $20.

There were always some titles that were priced to own, usually the title was a big hit at the box office. One of the earliest titles I purchased myself was the 1989 Batman, I bought it on VHS for about $17 and it included the Diet Coke commercial.

With the emergence of DVD, Blockbuster and other video, the cost of the DVD was no longer $80-$100. All titles of DVDs were sold everywhere.

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Bobby Henderson
"Ask me about Trajan."

Posts: 10973
From: Lawton, OK, USA
Registered: Apr 2001

posted 11-13-2013 09:31 AM

The trend for VHS tapes going from rental pricing to sell through pricing definitely finished before the late 1990s when DVD made its debut. The arrival of DVD didn't cause that shift to happen.

Laserdiscs, for the most part, were priced to buy, but not many video stores offered them for rent. That's one factor that kept LD stuck as a high end niche product. Mainstream consumers also didn't like movies broken up across two sides of a disc or spread across multiple discs. DVD initially arrived as a smaller replacement for laserdiscs. It overcame some of LD's limitations, like fitting a movie on just one side of a disc. It also took up a lot less space on a store shelf. That seemed to be enough improvement for DVD to become a mainstream movie rental format.

The general public adopted DVD at a relatively fast pace, a record breaking pace for an entertainment playback medium. If it wasn't for the crap foisted on the format by the backers of DiVX, as well as some technical limitations with the first couple generations of players, DVD would have gone mainstream a lot faster. VHS sales and rentals were still pretty strong until the middle of last decade when DVD was reaching its market saturation point. I think the DVR was the thing that really pushed VHS toward extinction.

quote: Mike Blakesley
The only other disadvantage to A.I.V. is, whenever I watch a movie it makes me think of some other movie I want to see... and THAT one is never in the Prime list, so it costs money to buy or rent. But so far I have resisted.

I have been annoyed by that with Amazon Prime as well. They have a decent number of free movies to watch (free if you have a $79 per year Prime membership), but too often movies that come to mind and become a topic of conversation turn out to cost $3 or $4 to rent. I rented Twilight Zone: The Movie off Amazon for some friends to watch because we were talking about scary airline movies. I wanted to watch the Korean action movie Oldboy since an American remake will soon be released. Hastings didn't have a copy of it on Blu-ray. Amazon had it for rent, but for $3.99.
[Frown]

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Terry Lynn-Stevens
Phenomenal Film Handler

Posts: 1081
From: Toronto, Ontario, Canada
Registered: Dec 2012

posted 11-13-2013 09:54 AM

quote: Bobby Henderson
The trend for VHS tapes going from rental pricing to sell through pricing definitely finished before the late 1990s when DVD made its debut. The arrival of DVD didn't cause that shift to happen.

Bobby, that is not what I remember, I used to work in the purchasing department for a major rental chain, it was DVD that ended the rental agreements with the studios which helped VHS go sell thru once DVD was available to all retailers on street date, this happened in and around 1997-1998 if my memory is correct. Blockbuster had the opportunity to keep the rental agreements but they declined and opted for sell through, at the time Blockbuster was almost 60% of the home video rental revenue for the studios.

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Bobby Henderson
"Ask me about Trajan."

Posts: 10973
From: Lawton, OK, USA
Registered: Apr 2001

posted 11-13-2013 11:00 AM

quote: Terry Lynn-Stevens
Bobby, that is not what I remember, I used to work in the purchasing department for a major rental chain, it was DVD that ended the rental agreements with the studios which helped VHS go sell thru once DVD was available to all retailers on street date, this happened in and around 1997-1998 if my memory is correct.

I'm just going by what I saw on store shelves in the early to mid 1990s. Video stores were still paying more (or even a lot more) for rental VHS tapes than what consumers were having to pay for the same thing at retail stores.

I remember being surprised by the pricing of new release VHS tapes at stores like Walmart and Sam's Club during the early 1990s. I keenly remember the very high "rental" style pricing movies on VHS carried in the late 1980's. Paying $89 (in 1980's dollars) for a movie like Die Hard or Aliens on VHS tape was pretty damned ridiculous, but some consumers did it. A few years later new releases on VHS priced near or below $20 seemed like a huge bargain.

These days brick and mortar video stores may still be paying more per disc. Take those rental specific Blu-ray discs, which I hate for their lack of extras or in some cases basic things like chapter breaks. I'll bet the video stores are paying more for those bare bones discs than consumers are paying for the more feature-loaded retail discs.

Blockbuster, no doubt, had its own specific agreements made with movie studios since it was such a large, dominant video store chain. If they got a more generous deal from movie studios, as opposed to what smaller video store chains and independents were paying for VHS tapes, then it just makes Blockbuster seem even more stupid, greedy and short-sighted in how they priced their rentals and treated customers. Pride is one of those seven deadly sins.

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Scott Norwood
Film God

Posts: 8146
From: Boston, MA. USA (1774.21 miles northeast of Dallas)
Registered: Jun 99

posted 11-13-2013 02:16 PM

My understanding is that the deal with Blockbuster was that, rather than buying a large number of "new release" tapes at the $80+ "new release" price, they made deals with the film distributors to buy the physical tapes at or below the manufacturing cost price in exchange for giving the distributors a cut of the rental revenue. By contrast, other stores would have to buy the expensive tapes at full price, although they could then keep all of their rental revenue.

The point of this was, in theory, to ensure that their most popular product (new video releases) would always be available to their customers without having to make a huge investment in "new release" tapes that might or might not actually get rented. It also gave them a competitive advantage over the mom-and-pop video stores, since the small stores could not afford to maintain a huge inventory of "new releases" at full price. Because of this, customers who wanted to rent "new releases" (i.e. the majority of customers) would go to Blockbuster because there would be a good chance that the tapes that they wanted to rent would be available.

Obviously, this worked pretty well for BB for a while, and it allowed them to drive most of the smaller video stores out of business before sell-through pricing started to destroy the BB model.

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Terry Lynn-Stevens
Phenomenal Film Handler

Posts: 1081
From: Toronto, Ontario, Canada
Registered: Dec 2012

posted 11-13-2013 03:26 PM

Yes Scott, this was exactly the case. I remember having the option to purchase the VHS "Priced to Rental" tapes, the bigger the order I put in the lower the cost. We would split the revenue from the rental with the studios. If we ordered a few titles, the cost would be sometimes over $100 for the rental. We were also not allowed to sell these tapes as previously viewed until months after the release date which was agreed upon by both parties. During the rental window, regular retailers were not offer "Priced to Rent" tapes and they received no discount if they wanted to sell the VHS tape at retail.

Once two or three months past, the priced dropped for regular retailers, this was all written in the contact. There were a lot of movies, Batman, Disney movies that did well, Jurassic Park etc that were street date VHS "Priced to own" this did not happen very often, maybe once a month. This was done strictly to movie VHS retail copies as the movie was a huge hit.

When DVD was released, it changed everything, Blockbuster was given the option to apply the VHS terms to DVD and they chose to decline.

What is interesting is that today, Redbox revenue shares with the studios, they receive DVD's for about $8 a piece.

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Brad Miller
Administrator

Posts: 17775
From: Plano, TX (36.2 miles NW of Rockwall)
Registered: May 99

posted 11-13-2013 06:25 PM

Scott, Rentrak actually pioneered that idea. They had a deal setup with the studios so if you signed up with them, you got the tapes for $7.99 instead of the typical $64.99 dealer price and then you gave them 50% of your rental revenue. They also set it up so once one video store signed up with them in a zip code (or it could've been so many miles away) that nobody else could sign up. Needless to say, whichever video store was smart enough to sign up first was the one that clobbered all of the others.

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Manny Knowles
"What are these things and WHY are they BLUE???"

Posts: 4247
From: Bloomington, IN, USA
Registered: Feb 2002

posted 11-13-2013 07:43 PM

quote: Justin Hamaker
As far as priced to own VHS, didn't that start with the release of Top Gun which had a Pepsi commercial on the tape? I was only 12-13 when that happened, but I seem to remember it was priced about $20

quote: Bobby Henderson
The trend for VHS tapes going from rental pricing to sell through pricing definitely finished before the late 1990s

I also recall TOP GUN being a new release priced at $19.95 with a Pepsi commercial at the start of the tape. I recall this being a pretty big deal -- the start of the shift away from "pricing for rental."

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Scott Norwood
Film God

Posts: 8146
From: Boston, MA. USA (1774.21 miles northeast of Dallas)
Registered: Jun 99

posted 11-13-2013 08:40 PM

So, Mom and Pop could sign up for the same percentage deal? Interesting.

For those who understand the video side of this business (which I know very little about): how many times did the average tape get rented before it became damaged or the title became unpopular? Given that we know that stores were doing better paying 50% of the rental instead of $70 (-ish) for the tapes, we can conclude that the average new-release tape would rent for fewer than 35 times.

Most of the recent-ish VHS rental tapes that I remember watching in the '90s had commercials or, more commonly, previews (not usually full trailers...more like TV spots) for other movies on them at the beginning. Did the sell-through tapes have that, too?

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Brad Miller
Administrator

Posts: 17775
From: Plano, TX (36.2 miles NW of Rockwall)
Registered: May 99

posted 11-13-2013 10:21 PM

Scott, the tapes RARELY got damaged beyond playability. Sure sometimes several inches would get chewed by someone's VCR, but those several seconds would just play through with static lines in it. Nobody really seemed to care much.

The attraction to the Rentrak system was that the smart video store owner who signed up for it could say "Batman - guaranteed to be in stock or anything else in the store rents for free" on their sign. The reason was that they would get 200 copies of the thing and it always WAS there in stock. Sure the first couple of days they might give away a few dozen free rentals, but big deal. Once that sign went up, NOBODY went to the competitor's video stores because they only had maybe 3 copies and I do mean MAYBE.

Remember also on VHS tapes that were priced to sell, I think it was $1.99 per tape to get it on the Rentrak program. At that point each tape only had to rent twice for the video store to turn a profit. Hence ordering a couple HUNDRED of them was a no-brainer. They would pay for themselves before the weekend.

The thing I always really thought was strange was how Blockbuster apparently duplicated their own tapes. They didn't get them from the studios. I remember when Batman came out Macrovision copy protection was very much a big thing, and a big problem for some people's systems that couldn't handle it and would distort a legitimate playback of the tape. If the tape was rented/bought from BLOCKBUSTER there was no Macrovision on it! If the tape was rented/bought from anywhere else, it had Macrovision in full force. I've no idea how commonplace that was, but I am 100% positive that was the case with the first Batman movie on VHS.

Another weird/neat idea was the tape that could only be played so many times. It had a counter on it that was reset by rewinding the tape. When it hit its last play an internal magnet would swing into the path and erase the tape badly enough so that it wouldn't play anymore. The studios sent out screener copies on those tapes and they were usually set to play 2 times and the cases were sealed shut and also used a funky security screw. I've got some around here somewhere that I saved because they were so unusual.

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Michael Coate
Phenomenal Film Handler

Posts: 1904
From: Los Angeles, California
Registered: Feb 2001

posted 11-14-2013 12:08 PM

quote: Justin Hamaker
As far as priced to own VHS, didn't that start with the release of Top Gun which had a Pepsi commercial on the tape? I was only 12-13 when that happened, but I seem to remember it was priced about $20.

quote: Brad Miller
I believe it was Crocodile Dundee that started the whole "price to own" VHS model. Either way it was definitely Paramount that made the change from $80/tape to $20/tape with that stunt...and it worked. People started buying the tapes rather than copying them. In the end it was a genius move.

quote: Manny Knowles
I also recall TOP GUN being a new release priced at $19.95 with a Pepsi commercial at the start of the tape. I recall this being a pretty big deal -- the start of the shift away from "pricing for rental."

The first "sell through" VHS and Beta release is generally accepted to have been Paramount's Star Trek II: The Wrath of Khan, released in autumn 1982 at the then unheard of price of $39.95.

I'm not sure which title was the first to have an SRP of under $20, but it definitely wasn't Crocodile Dundee or Top Gun, which were initially released at $29.95 and $26.95, respectively.

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Brad Miller
Administrator

Posts: 17775
From: Plano, TX (36.2 miles NW of Rockwall)
Registered: May 99

posted 11-14-2013 01:26 PM

In hindsight, Michael is right. $20 was the approximate store's price on CD and TG, not the street price.

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Joe Redifer
You need a beating today

Posts: 12859
From: Denver, Colorado
Registered: May 99

posted 11-14-2013 03:46 PM

And by "street price" you mean MSRP. MSRP of Blu-rays are waaay up there, usually around $40 I think. Though I've never seen them sell for that much unless they come with absolutely useless trinkets and unshelvable boxes. That's right 'special editions', I'm looking at you and you can go straight to hell.

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