Some video stores join forces

Some video stores join forces

May 29th, 2009 by Amy Williams in Businesstopstory

Staff Photo by Tim Barber Alan Millican, owner of Video Hut, recently renamed the store from the old name of Marquee Video. Video Hut is located near the Brainerd and Moore Roads intersection.

Alan Millican describes the state of some the video rental industry as a "death of a thousand cuts."

He cites challenges brought on by large rental chains, Web-based rental companies like Netflix and the growth of sites like YouTube as chipping away at the share of the market of stores such as his.

To help combat the increasing competition, Mr. Millican's 15-year-old Brainerd Road store Marquee Movies recently became part of the Video Hut network of stores.

"All of the small things have cut into growth, but there is still room for success," Mr. Millican said. "It's not as easy as it was, and it may be best for people to work together rather than independently."

The switch from Marquee Movies to Video Hut become official in April. To transition from the old store to the new came with a $25,000 investment from Mr. Millican. He totally gutted the store and replaced carpet, shelving and signage inside and outside the store.

He also added a new computer system that allows customers to trade their movies more easily and better tracks the types of movies the store's customers want.

But customers will not see a difference when it comes to movie selection, Mr. Millican said. The store still offers about 20,000 different titles for rent.

More businesses like Mr. Millican's are looking for ways to combine resources, said Sean Bersell, vice president of the Entertainment Merchants Association based in Encino, Calif.

"It's a challenging time for independent video stores," Mr. Bersell said.

The industry grew initially in the eighties and nineties because of owners like Mr. Millican, he said. As they begna to face stiff compeition from Blockbuster and then Netflix, the store owners began to look for ways to survive, he said.

He said he has seen them band together into buying groups in order to buy product or become part of networks like Video Hut.

"This is another manifestation of that type of joining up with others to get the benefit," Mr. Bersell said. "It's one way independent video stores can try to survive."

Across the country, there are 12 owners of 35 to 40 Video Hut stores. Mr. Millican said Video Hut plans to continue opening stores around the country, and together they all benefit from increased buying power.

"There could be definite advantages for business merging," said Bruce Hutchinson, an economics professor at the University of Tennessee at Chattanooga. "It's an economy of scale."