Smaller stores fight Blockbuster for
Paula Lavigne
Senior Editor
Open the phone book to video
rental and start dialing down the list.
Only a few numbers into the list and
the “no longer in service” messages
begin.
The messages reflect the dwindling
competition among independent video
rental stores, which is dominated by
one national chain, leaving consumers
with fewer choices and smaller stores
with fewer chances.
After buying out a five-store chain
in December, Blockbuster Video in
creased its hold on Lincoln’s video
rentals to 10 stores. Another five inde
pendent video rental stores closed their
doors forever last year.
Blockbuster broke into Lincoln’s
market in March 1988, with a store at
140 N. 48th St. Today the company has
stores in east, north, south and down
town Lincoln. Based in Ft. Lauderdale,
Fla., the chain has 4,795 stores inter
nationally.
Wally Knief, company spokesman,
said Blockbuster had the financial re
sources to offer, “something to a de
gree no one else can offer.”
“We have the quantity, breadth and
depth of offerings,” he said. “We have
all catalog titles and all hits, and not
everyone is in a position to do that.”
And that position is exactly what
has forced some small video store own
ers into the less-advantaged side of eco
nomic Darwinism. Store owners who
want to stay in the market said they
had to find a different way to compete.
Randy Abel, manager of Film Strip
Video, 897 N. 27th St., has been in
Lincoln’s video rental market for al
most 20 years, nearly as long as video
cassette recorders have been around.
Abel said the popularity of cable,
the entry of grocery and convenience
stores into the rental market and the
dominance of Blockbuster, forced
smaller video rental stores to start fold
ing.
Film Strip survived by diversifying,
he said.
“Getting into the game rental mar
ket got us through tougher times,” he
said. f
Independent stores also don’t have
the strict regulations and restrictions
that a national chain has, he said. And
that has helped Abel’s business. He said
Film Strip could offer special titles, di
rectors’ cuts and videos that aren’t
available from national chains. Flexible
prices also helped Film Strip stay afloat.
“They try to take over, but we have
our own little niche in the market,” he
said. “We’ll put the gloves on with
them.”
Crain Starks, owner of Super Duper
video, 916 S. 13th St., agreed that find
ing a niche was important. While
Blockbuster could pick up the transient
university customers, Super Duper ap
pealed to community interests.
“Most of the independents here
have been in business from seven to 10
years,” he said. “You have a core cus
tomer base.”
National chains still have an advan
tage over smaller stores because of
their publicity and name recognition,
said Robin Anderson, director for en
trepreneurial studies at the University
ofNebraska-Lincoln.
Anderson said Blockbuster Video
stores have better access to supplies,
lower overhead costs because they buy
in bulk and good customer service.
Blockbuster’s dominance is a result
of practicing wise business strategy,
Anderson said, and not by monopoliz
ing the market. But another UNL pro
fessor said he thought the rental chain
could be reaching monopoly propor
tions.
David Rosenbaum, UNL econom
ics professor, said Blockbuster was a
dominant firm with “monopolist power
in the market.”
“It’s power over pricing,” he said.
Whether Blockbuster’s purchase of
the five-store Video Station chain last
year was fair is up to the courts, he said.
Aaron Steckelberg/DN
The purchase concerned
Rosenbaum enough that he brought it
to the attention of Nebraska’s Attor
ney General’s office, he said. But he
was told there was not enough evidence
to prove Blockbuster was an illegal mo
nopoly.
“What is the video rental market?”
he asked. “Is the first-run video mar
ket different from the market for old
movies?
“Blockbuster is the only place to go
to rent a new video, and maybe the at
torney general’s office didn’t see it that
way.”
Either way, with one chain as the
dominant firm, he said, that chain could
make customers pay more, rent poor
quality videos or pick from a limited
selection.
“It’s not whether they change to a
high price,” he said. “That’s irrelevant.
It’s just that they have the power to do
it.”
But maybe not for long. One of the
ways to bring back competition would
be to give Blockbuster a chance to pick
on someone its own size — another
national chain, Rosenbaum said.
On Sept. 30, Hollywood Video,
based in Wilsonville, Ore., will open its
first Lincoln store near 56th and O
streets, fewer than 10 blocks from a
Blockbuster store on 48th and O.
Hollywood already has a store in
Omaha on 129th and Center streets.
Dan Flott, store manager, said Holly
wood competes with Blockbuster by
offering lower prices, five-day rentals,
longer hours, more lenient collection
of late fees, immediate membership and
a better atmosphere.
“We’ve got that Hollywood men
tality,” Flott said. “We have the bright
neon lights and marquee posters of dif
ferent celebrities.
“You feel like you’re going to Uni
versal Studios.”
Hollywood has 200 stores nation
wide, he said, and plans to expand to
2,000 in fewer than three years.
Flott said Hollywood plans to ex
pand its presence in both Omaha and
Lincoln. He said they wouldn’t know
how competitive Hollywood was until
it had about three stores in each mar
ket, but it was ready to bust the block.
‘We're going head to head with
Blockbuster.”
Discounts off AIKT basic rates. Refers to tiBET home or AISFCaihng Card accounts. Subject to billing availability Certain exclusions apply ^Subject to dedk approval.5 Valid for 1 yt Mifit sign up ill 1996 and use service at least 1 ht/mo. $250 for additional his. or $1595 for unlimited usage.
• ' ;v . i-r '
