The choices for Greater Bangor residents on a Friday or Saturday night used to be simple. If you wanted to rent a movie, go to the Blockbuster near the Bangor Mall or one of the three Movie Gallery stores in the Bangor-Brewer area. There were a few independent video stores, including Edge Video when it opened its two stores in 2006, and Hannaford supermarkets rented films from the customer service desk.
With the closing of all three Movie Gallery locations in Bangor-Brewer, Hannaford no longer renting films, and talks of Blockbuster going through bankruptcy, the local rental options from traditional sources are becoming scarce. But because of new technologies and innovative business models, some new options are available that weren’t even around five years ago.
A larger share of the home movie market is being consumed by these new options, Netflix and Redbox. Netflix is the world’s largest subscription service that sends DVDs by mail, according to its Web site. It also entered the streaming-movies-over-the-Internet market, offering that near-instant rental service to tech-savvy cus-tomers. Since its refiling of incorporation in 2000, it has become a substantial presence in the home movie rental market.
The Redbox concept of a fully automated movie rental kiosk originated in 2002 from within McDonald’s Ventures LLC. Coinstar, the company that owns the spare change machines at supermarkets, invested in the firm in 2005 and purchased the remainder of the interests from McDonald’s in February 2009, according to the Redbox Web site. There are now more than 22,400 kiosks nationwide, including nine in Bangor and Brewer.
The more traditional national rental chains such as Movie Gallery and Blockbuster are struggling to compete. Movie Gallery filed for its second Chapter 11 bankruptcy on Feb. 2. According to its bankruptcy filings, Movie Gallery shrank from 4,430 stores in late 2007 to 2,600 stores in early 2010. It is seeking to close hundreds of additional stores nationwide. In Maine, more than half of Movie Gallery’s 40 stores are closing because of the bankruptcy. In Bangor, this includes both the Union Street and Broadway stores, which already have closed. With a recent news article from the Wall Street Journal claiming that “bankruptcy might be looming” for Blockbuster, the time of the nationwide bricks-and-mortar rental stores could be waning.
Why are national rental stores losing out to the newer, less personal rental options?
“It’s more about the companies’ finances nationally than the local business model,” said Doug Gordon, co-owner of Edge Video. “Blockbuster and Movie Gallery have a lot of debt from when they expanded” several years ago. According to the Wall Street Journal article, Blockbuster is about $1 billion in debt. Movie Gallery is more than $540 million in debt, states the bankruptcy filing.
Gordon also points out that both Netflix and Redbox have tremendous business models, which puts them in a strong position against the chain stores. Netflix customers send back their movie selection through the mail and will usually receive the next selection in only two business days. Netflix was able to open a South Portland distribution center in 2006 to speed the process.
Gordon said, “Redbox is a national success story during a tough economic time.” The customer is charged $1 a day for each DVD, and the Redbox kiosk holds more than 600 DVDs, with many of the newest titles. Kiosks are conveniently located within other businesses, such as supermarkets, pharmacies and retail stores.
But these new movie rental competitors must still compete with local, independently owned movie stores.
It seems Gordon’s own rental stores are surviving the current recession better than the chain stores. When Edge Video originally got into the Bangor rental market four years ago, Gordon worried about competing with Blockbuster and Movie Gallery. His business model of $1 rentals for one night wasn’t supposed to be profit-able, according to the rental industry. But his business doubled when the Brewer Movie Gallery location closed approximately a year ago, Gordon said, and with the Union Street Movie Gallery having closed, his Main Street store is seeing increased business.
Gordon has adapted to the changing industry and says he will continue to do so. He will be expanding the hours of operation to keep up with the new traffic at the downtown Bangor store. In fact, he is considering expanding his store locations after the Movie Gallery closures. “It will likely happen in the next year,” Gordon said.
He said he will take what he learned from the Bangor and Brewer stores, and the new store will be tailor-made for its location. He said he tries to offer something different in his stores from the “sterile corporate environment” of most chain rental stores. Edge Video is primarily meant to be “a store for people who just love mov-ies,” he said.
But a Movie Gallery employee at the closed Union Street location isn’t so sure where customers will go now that the store has closed.
The former employee, who did not want to be identified, said some of her customers have gone over to Redbox and Netflix. But the Union Street location “is a big walking area,” she noted, and the store’s closure will specifically “hurt those customers.” She said she sees generational differences in people choosing to watch movies.
“Older people like to read the backs of DVDs and look around the store,” she noted. “We’ve even had calls about how to use the DVD remote.” The younger generation will simply go online and stream or download movies, she said.
A current Netflix customer, David Bamford of Bangor, is sad to see the Movie Galleries close, but said it was inevitable. “Various new technologies wipe out what came before them,” he said. “All this [current] turmoil is companies deciding what kind of delivery system the customer wants.”
Bamford downloads movies directly to his entertainment center with his Netflix subscription and also uses the company’s DVD mail-back system. The only thing he misses from the movie rental store, which he hasn’t been to in three years, is the instant gratification of renting directly.
Jennifer Bradley of Bangor agrees. She stopped using the video store about the same time she started using Redbox, a year and a half ago. While for her the downside of Netflix is the availability of titles, with Redbox she has never had a problem. “I go online to see if a Redbox in the area has a movie I want,” she said.
She then reserves the title and goes to pick it up. Bradley apologetically said she doesn’t miss the rental store experience, but there “will always be people who like that face-to-face experience.”
As for Edge Video’s future against Redbox and Netflix, Gordon is optimistic. His stores have continued to do better overall each quarter, even through the recession, he said. Edge Video sells DVDs and VHS tapes, rents and sells video games and video game systems, something Redbox is currently unable to do. Gordon had Blu-rays in his stores early because of the national momentum toward the conversion, but they hadn’t taken off locally until the last six months. Redbox just announced the coming availability of Blu-rays in its kiosks.
The Edge Video Brewer store entrance sits only 20 feet away from Hannaford’s Redbox kiosk, but Gordon isn’t worried. “I’ve been told since the late ’80s that video stores are dying, get out,” said Gordon. “There’s still a population that want[s] to look at what they’re renting and talk to knowledgeable people about it.”
Gordon doesn’t see another national chain store moving into the area in the short term. “If anything, you’ll see another independent store,” he said. Gordon surmises that this transitional period could lead to a renaissance for the locally owned movie rental store.
“What’s the alternative? A nation of Internet stores and vending machines?” he said.
Jeremiah Rancourt has a Web site, www.thereelguy.com, on which he posts movie reviews. He receives complimentary rentals from Edge Video to facilitate his reviews.