Monday, July 27, 2015

Movie Night-Disruptive Technologies in the Movie Rental Industry

I like to discuss this week’s topic of disruptive technologies in the context of the movie rental industry. Growing up in the Chicago area in the early to mid-1980s, Friday nights in my household were usually designated as a “Family Movie Night.”  As a way to appease everyone, we usually would be able to pick two movies, one comedy/action to appease the male members of the family (my Dad, brother and myself) and one drama (Mom).  Prior to heading to the video store, my parents would call in a pizza order from their home phone.  The pizza restaurant was approximately two blocks from the video store we frequented. We normally had roughly 30 minutes to find two movies before jumping back in the car to pick up the pizza and head home.   I always remember wanting to get to the video store early because the more poplar movies would usually go first.  At the time, the movies came in two formats, Beta and VHS. My parents opted for VHS at the time mainly because the VHS rentals far outpaced number of the Beta version copies of the movies.  It was also around 1983, I believe, that one of my neighborhood friends began to pay for a subscription service in Chicago called “OnTV.”   I recall that ONTV showed uncut movies and local sports.

Our family’s movie night routine continued over the years with the choice of video store chain changing from local mom and pop video stores to eventually Blockbuster Video which seemed to drive the mom and pop stores out of business as Blockbuster had more locations, and a bigger and better selection, that included video games.  We continued this routine even though my family also began to subscribe to Cablevision, a local subscription cable provider.  Although our house now had cable, with various iterations of companies over the coming years, throughout college and law school (basically whenever I or my brother came home to visit), our family would still head over to the local Blockbuster store to pick up some movies. At this time the videos we chose were no longer on VHS, but on DVD.  We still tried to get there early because the new/popular movies still tended to get picked over first.  When I moved from Chicago to Pittsburgh in the early 2000’s, I continued to go to Blockbuster and order a pizza (although I would order the pizza while in the Blockbuster using a cellphone).  Eventually DVD’s morphed into Blue Ray.  I got married and my wife and I continued the tradition, until we had kids.  As a matter of convenience, we began to use Red Box, which began popping up at local Giant Eagle stores.  So instead of spending time at the Blockbuster store hunting for a movie, I would run to Giant Eagle, get a movie from the Red Box kiosk and run into the store for a pizza.  Eventually, we began to subscribe to Netflix and stream movies and I began to make homemade pizzas.  So while we have continued the family tradition of movie night, our choices in movie selection have become dictated based on reduction in cost (driving to the movie store costs gas, time to commute to and from store, cost of rental,) and more value (an unlimited movie selection, available at any time without having to leave the home, rentals at a very low cost).   Looking at it the companies we have used over the years, it is no surprise that the traditional video stores disappeared as a result of their inability to create new market spaces or adjust their business strategies to stay atop of their industry.

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