Online streaming clouds future for movie rental stores

At noon on a recent Tuesday, Rob Olason, as usual, opened Trek Video, his movie rental shop in Bellingham’s Fairhaven District.

But when one of the day’s first customers asked Olason to stand out front and pose for a photograph, it was clear that this Tuesday would be different than any of the other hundreds he has spent in his store since it opened in 1990.

Having struggled through the recent economic recession and rise of online movie streaming, Olason decided last month to close Trek Video, one of Bellingham’s last remaining movie rental shops.

Trek’s final day was May 10. A liquidation sale will likely continue throughout June.

“It’s not surprising. It’s sad,” said Jonathan Sodt, a former employee who’s now a graphic designer and cartoonist. “It’s been pretty clear to me that the industry has been changing. I’m impressed and proud that Rob has held on as long as he has.”

Olason said Trek Video was doing well up until 2008. But the recession, coupled with the rise of online streaming services such as Netflix, created a double whammy of competition and challenge.

As one of the most popular on-demand media streaming services, Netflix reported more than 33 million U.S. subscribers in 2013, with annual revenue of more than $4.3 billion.

Olason said Trek survived previous business slumps, with rentals usually recovering after three or four down years.

But since the last drop, business hasn’t returned.

Although Olason said he believes rental stores still have intrinsic benefits to customers that streaming services cannot match, the turmoil has given him an uncertain view of his industry’s future.

“It’s very likely that in five years there will be no more video stores in town,” Olason said.

Trek’s closure leaves just two movie rental stores in Bellingham: Crazy Mike’s Video at 1066 Lakeway Drive, and Film Is Truth 24 Times A Second at 211 W. Holly St.

That Bellingham can still support two rental shops is somewhat of an anomaly, considering the downward trend of the industry, said Keith Carmack, store manager at Crazy Mike’s.

After years of growth, business leveled off for Crazy Mike’s in 2011, Carmack said. But the store continues to rent enough movies and video games to sustain its operation.

“We’re definitely making a profit still, which is odd considering the overall climate of the industry,” Carmack said.

Crazy Mike’s found success in the past decade by buying up DVD box sets of popular television shows, such as ABC’s “Lost” and Fox’s “24,” Carmack said.

Focusing on TV shows, which split up seasons into a series of DVDs, hooks customers and almost assures repeat rentals, he said. TV shows are also conducive to “binge viewing,” where fans watch an entire season, or even an entire series, in one sitting, he added.

Netflix encourages the same style of viewing by releasing entire seasons of some of its most popular shows all at once, instead of drawing them out through weekly installments.

Carmack’s business decisions are influenced heavily by Netflix, he said.

He constantly monitors the films the service puts out on the Web, and tries to beat it on new releases. He later weeds out movies that prove less popular with renters, or ones become widely available online.

John Saxer, a longtime Crazy Mike’s employee, said rental stores face an uphill battle when trying to attract younger customers more apt to prefer computers and streaming services to DVDs and Blu-Ray Discs.

“Everything is changing because of the technology,” Saxer said.

Carmack said he was sad to hear of Rob Olason’s decision to close Trek Video. But it wasn’t hard for him to believe the news.

“There are no surprises anymore,” he said.

The same thing is true for Emily Marston and Karl Freske, who opened Film Is Truth in 1997.

Marston said Film Is Truth has always focused on the number of movie titles they carry in the store, rather than the number of copies of a particular movie, a strategy used for decades by larger chain stores like Blockbuster, which closed its last company-owned locations earlier this year after filing for Chapter 11 bankruptcy protection in 2010.

She and Freske have always considered Film Is Truth as a specialty purveyor of rentals, adding that their business is more comparable to a library than a retail store.

They have already begun exploring new strategies to keep Film Is Truth afloat should online competition grow even more formidable, although Marston declined to go into greater detail.

The store doesn’t generate huge returns, Marston said, but its business is sustainable.

“We have been able to break even,” she said.

Marston said Film Is Truth survives due to its supportive customers and a strong “buy local” ethic in Bellingham. Carmack at Crazy Mike’s said the same about his store.

Since opening Film Is Truth, Marston said she and Freske have stuck to several core business principles, including not taking on large amounts of debt and focusing on movie rentals instead of diversifying and offering other types of services to supplement the store’s income.

But the challenges they face today have been there since the beginning, she said.

“We knew it was a dying industry when we opened the store,” Marston said.

The U.S. DVD, game and video rental industry shrunk by 13.7 percent annually between 2008 and 2013, according to the market research firm IBISWorld. A little more than 4,200 movie rental businesses nationwide remain in operation today.

Local stores that have survived have done so, in part, due to the communal and social nature of the movie renting process, said Patrick Dodds, a student filmmaker at The Documentary Center in Bellingham.

“People can meet people, and they can feel like they’re going to a fun place,” Dodds said. “That’s something that streaming can’t do.”

Dodds is currently working on a documentary about Bellingham’s movie rental shops. It’s called “Still Playing.” He hopes to have it finished within the next few months.

For Dodds, the closure of Trek Video hit hard, emotionally, he said.

The filmmaker, who has a disability (he asked that its specific nature not be included in this article), said trips to movie rental stores became regular rituals when he was younger, granting a reprieve from the less enjoyable aspects of daily life.

“Video stores were kind of my sanctuary,” he said.

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