Ask any film fan and there's a good chance they will bemoan the passing of their local DVD rental store. But more and more of those film fans are choosing online rentals or on-demand services from their TV and causing traditional video shops to fold at the rate of several a week.
The death knell was sounded for many last summer as months of hot weather and the football World Cup kept renters away. The recent hot spell bodes ill for this summer and insolvency experts see no let-up in the rate of closures.
The number of DVDs rented in Britain has fallen every year since 2001, according to industry statistics. In 2006 rentals, including online, were 116m - fewer than three per adult and a third of the market's heyday in 1989, according to new figures from the British Video Association.
The new online rental services may be booming, but the pressures on bricks and mortar film rental businesses keep on rising. An 18% slump in their sales volumes last year is testimony to a host of new ways for households to get the films they want, often without even leaving the sofa. There is Sky Box Office, Virgin Media's on demand service and online postal services such as Amazon, Blockbuster.co.uk and LoveFilm.
Last week internet group Tiscali said it would let users legally download films for as little as 99p. Even libraries, which can offer a week-long rental for £1, have contributed to the change seeing their share of the market increase to 6.8% last year.
A sharp fall in the average price of a DVD in the shops to £9.46 from £17 in 1999 along with widespread film piracy has also hit the rental market. Consumers face choices such as buying a pirated DVD in a pub for £3.50 or opting for a rental at the same price, which would probably have to go back the next day.
Wishlist
Legal copies of new releases are also cheaper than ever, with the recent James Bond hit Casino Royale being offered at £7 by Asda supermarkets. Cut-prices have prompted rising sales and falling rentals. Having peaked in 1989 at 289m, rentals dwarfed sales of videos and DVDs for years. But in 2003 sales outstripped rentals for the first time and have done so ever since.
Price is just one element that online rental services have played on. They also lure away customers from the traditional rental store with the promise of no late fees. Films are sent out from a customer's wishlist and once the first package is returned by post, the next chunk of films from the list is dispatched.
Consumers seem to like what they have seen of the online model since it came to UK shores in 2004. Online rentals last year moved in the opposite direction to over-the-counter, soaring 19%.
Following a flurry of mergers, the market now has only three big players: Amazon, Blockbuster and the dominant LoveFilm. The latter also runs services for Tesco, WHSmith, Odeon cinemas and the Guardian.
LoveFilm's chief executive, Simon Calver, said online is taking a growing piece of the rental pie.
"You have to look at the value proposition. To the customer, online works out at about half the price with no late fees and much more choice."
From 17% in 2005, online's share went up to 24% last year. The recent spate of hot weekends has hit traditional stores even harder and seen online move up to a 30% share of the rental market, Mr Calver says.
"I see the share being over 50% in the next couple of years," he predicts. Not all that is destined to be snatched from video stores. LoveFilm recently launched a TV advertising campaign to get new people into renting.
Still, the signs are clearer than ever that up and down the country, households are shunning their local video store. One of the most recent victims was the Filmnight chain of 60 rental stores, which traded under a variety of names including Primetime and Apollo Video. Its administrators, David Rubin & Partners, managed to sell 20 stores, the others closed down.
Impulse
Asher Miller, a partner at the administrators, says he has had to shut down 80 rental stores over the past year. Only those with a niche offering or a sideline such as an internet cafe can survive. "With the advent of technology and digital TV, unless you have a specific angle, I don't see a future for the business."
Rental group ChoicesUK last month lost its founder, Iain Muspratt. That followed a dire profits warning from the Peterborough-based company, which operates 180 stores and supplies movies for rent and sale through convenience stores. US group Blockbuster has also closed British stores in the past year.
Smaller independent stores stress the market is not in meltdown. They argue that while online services involve waiting for the post, a DVD store provides instant access. It also allows renters to change their minds on impulse, whereas those who use an online subscription are tied to what comes in the post.
"In our stores we have an instant wishlist," says one store owner. "You don't know what the post will bring. It's like if you are hungry and you don't know if you are going to end up with pizza, Indian or a Chinese."
Lavinia Carey, director general of the BVA, says those who tap into niche interests and remain flexible are still doing well. "Rental stores are well-known for tailoring their offers."
The BVA is hoping the arrival of high definition will restore some value to the DVD market. Rental shop owners are also hoping the large chunk of households who now have high definition TVs will use heir local store to get the newest releases in the new format.
But even the most optimistic store owners admit there is one big cloud on the horizon. Video on demand is set to be the toughest challenge to rental yet. Not only will viewers be able to get films at the click of a button as with Tiscali, but more on demand TV shows will also join the fight for eyeballs.
The BBC last week received the go ahead to launch its iPlayer service, offering seven-day catch-ups. ITV is to launch a video on demand service within weeks.
For now the technology is seen as overwhelming by many and broadband connections are still not fast enough to make feature length film downloads an easy option. But connections will speed up, the link to televisions will become seamless and the video store as we know it may well be consigned to the history books.
The Survivor
A south London store is thriving by investing in more foreign films that appeal to the local audience and by relaxing its rental terms.
Hicham El Kettani tells a different tale to many of his peers in the DVD rental business. After moving to London from Morocco in 1989, he started his first rental business in 1991, delivering videos by bike to flats around south-east London. Almost two decades on, the 40 year-old says his Circle Home Entertainment store is thriving.
He puts the success down to a favourable audience of young professionals and a vast amount of stock.
"It's not yuppie but it's that the people we have are intellectuals, people who know what is going on in the world," he says.
He offers 10,000 titles, a quarter of them foreign films. "Most video stores now are not investing in the content. They are cutting down on spending. If you do that you go downhill; you cut your throat," he says. He admits there has been pressure from online rental services although he continues to match them on choice.
Online rental's no-fine policy for late returns hurts his business but he responded to the new competition by changing rental terms to make all but the latest releases available for five days. Mr El Kettani is confident it will be business as usual but not forever. "This business will survive for now and in five years' time," he predicts. "But when download is mass media in 10 years' time it will kill the business."
The Long Goodbye?
... but a 22-year-old business near Manchester is now only surviving by selling old-fashioned sweets to eat while watching films.
Lesley Cavanagh has been working in DVD Knights in Stockport, near Manchester, for 22 years. She runs the store with two part-time employees but has to rely on selling old-fashioned sweets to keep her rental business afloat.
"I had to find something to complement the DVD rentals and people like to chew on sweets while watching a film. Without this line, we would have gone under," she says.
"A rise in piracy and internet downloading has definitely affected my business. Five years ago, we used to earn two and a half times more than we do now. There used to be three full-time and four part-time staff in 2002 but some had to be made redundant and others weren't replaced when they left."
The shop is open from 10am to 10pm but Mrs Cavanagh thinks that the business will need to be open for fewer hours in the future unless new lines can improve sales. There are signs of hope. "Some customers have come back and say that they used to buy DVDs but they take up so much room in the house and they didn't watch the film more than once. It's not many though."
Rumeana Jahangir
