Movie Gallery customers> need to find a new movie-rental option.
The company, which also operates the Hollywood Video and Game Crazy chains of video shops, plans to close its remaining 2,415 stores, according to a Wall Street Journal report. The move comes in the wake of Movie Gallery filing for Chapter 11 bankruptcy protection in February. (The company did not respond to calls for comment before press time.)
We ve seen the writing on the wall [for in-store rentals] for years, says Dan Rayburn, a principal analyst with Frost & Sullivan, covering the online video market. Consumers have flocked to more budget-friendly rental options including mail subscriptions, online streaming and kiosks. Blockbuster hasn t fared well in the new changing rental environment, either. In March, the chain warned in a regulatory filing that it may be forced to seek bankruptcy protection if it is unable to refinance its debts. (Blockbuster did not return calls for comment before press time.)
In the rapidly changing rental market, there's no longer one best choice for orphaned Movie Gallery customers and other in-store renters. The best bet for your movie tastes and budget is likely to be a mix of several sources. Whatever you pick, track the number of rentals monthly, as well as your expenses. Most people overestimate how quickly they ll get to watch movies given work and social commitments, and so overpay, says Aya Kaneta, the community manager of budgeting site Thrive. Here's how the options measure up:
Video-rental kiosks -- vending machines that dispense DVDs could lure some of Movie Gallery s in-store renters, especially people who aren t comfortable renting online. Kiosk rental has grown rapidly. In a new study by research firm Market Force, 41% of participating consumers said they use kiosks instead of in-store rentals. (It was the first year the study was conducted.) Kiosks have a convenience factor: Most are located in supermarkets, drugstores and malls, Kaneta says. Unlike most video stores which want films back by 4 p.m., kiosks require returns by 9 p.m. Otherwise, you will be charged for another night s rental.
Good for: Budget-minded renters. Kiosks are by far the cheapest option for those who watch and return rentals quickly, Kaneta says. Redbox charges $1 a night for DVD and Blu-ray (available only in select locations). Blockbuster Express charges $1 a night for DVDs, $2 a night for Blu-ray. Sign up for email notifications, and both services will periodically send you codes for a free night s rental.
Bad for: Older and niche movies. Kiosks can hold up to 1,000 DVDs, and typically only carry 200 or so titles. That means selection will be limited to new releases and popular titles. (Redbox's selection may be even more limited. Earlier this year, the company struck a deal with Warner Bros., agreeing to withhold titles from the rental market until 28 days after they go on sale.) Kiosks aren't kind to return procrastinators, either. Lose or fail to return the disc within 25 days and you will be charged the full rental rate for that period (i.e., $25).
One of the big allures of new television sets, Blu-ray players and videogame systems: apps that let you connect to the Internet. Consumers with a high-speed Internet connection can easily rent movies to play on their home computer or TV, says Aaron Patzer, the chief executive of Mint.com. Netflix lets its subscribers stream movies for free, while both Apple s iTunes and Blockbuster offer 24-hour downloads for up to $4. Most cable providers also offer on-demand streaming of select movies; older films can be free, while newer ones will run in the $10 range.
Good for: Immediate gratification. Just a few clicks and you have a movie ready to play on your home computer. For avid movie watchers, streaming can also be one of the cheaper options. Patzer likes Netflix's cheapest plan ($8.99 a month), which includes one mailed DVD out at a time as well as unlimited instant streaming.
Bad for: Slow or unreliable Internet connections. The video quality may not be great, especially if you re routing the movie to your TV rather than watching on a smaller computer screen, he says. Instant watching isn t an option for every movie, either. Netflix, for example, offers streaming for roughly 17,000 of its more than 100,000 titles.
Nearly a third of consumers use either Blockbuster or Netflix for movie home delivery, according to Market Force. The two rivals have identical plan pricing: $8.99 a month for one DVD at a time, $13.99 for two and $16.99 for three. But there are some differences in their plans. Blockbuster doesn t charge extra for Blu-ray; Netflix tacks on another $1 to $4 monthly, depending on your plan. Netflix users may also have problems getting some new releases. Like Redbox did, Netflix struck a deal with Warner Bros. this year, agreeing to withhold titles from the rental market until 28 days after they go on sale.
Good for: Combination renting. For an extra $3 a month, Blockbuster subscribers can swap mailed DVDs in stores for faster exchanges, and get free and discounted in-store rentals. On Netflix, members get unlimited streaming.
Bad for: Budgeting. Make sure you really need a multidisc plan before subscribing, Kaneta says. The difference between a one- and three-disc plan amounts to an extra $96 a year.
MovieGallery, Hollywood Video and Game Crazy customers may still have a few months to rent in stores. After that, Blockbuster and local rental stores are still an option, although those numbers are dwindling, too, Rayburn says. According to Market Force survey, 18% of consumers say they plan to make fewer in-store rentals over the next year.
Good for: Fast access to new releases and Blu-ray titles. If you tend to keep movies for the full rental period, the cost-per-day can be on par with or lower than kiosks.
Bad for: Renters on a budget. Blockbuster charges $6 for new titles and $5 for older ones. Blockbuster also recently reinstated late fees, charging $1 per day after the rental period, up to $10 total. (Previously, consumers had a 10-day grace period before being charged a one-time $10 fee.)
This story was updated from a piece that originally ran March 16, 2010.>