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BIG BUSINESS BLOCKBUSTER HAS CAPTURED 20 PERCENT OF THE VIDEO RENTAL MARKET BY ANDY WICKSTROM

Knight-Ridder

IT'S A SAFE bet that anyone who rents videotapes has heard the name Blockbuster Video. It's a name most smaller store operators wish they didn't have to hear. In a year when many video dealers have complained about stagnating business, Blockbuster is racing ahead as if the video revolution never peaked.

In 1990, the chain almost doubled the number of its stores, from 862 to 1,545. In total revenues, it shot past the billion-dollar mark to hit $1.25 billion, up by a breathtaking 88 percent from 1989's $664 million. The company, based in Fort Lauderdale, Fla., can boast that one out of every five video-store rentals in this country takes place at a Blockbuster store.

These stark indications of the chain's dominance as well as other interesting facts about the state of video stores are contained in the latest ranking of the Top 100, compiled annually by Video Store magazine.

According to the magazine, consumers will spend $9.44 billion on pre-recorded video in 1990. Just four years ago, they spent $4.11 billion. It's that kind of appetite that has made it possible for Blockbuster to grow, during the same time period, to its present formidable size from a mere 11 stores.

Other chains have enjoyed rapid growth as well. Philadelphia's West Coast Video occupies the No. 2 spot on the Top 100 for the second year in a row, with 610 stores.

Erol's, the 209-store chain based in Springfield, Va., was also a former No. 1, back in 1987. In the latest ranking it clings to the No. 3 position even though it has the distinction of being the only chain in the top 10 to report a revenue decline.

Although Erol's dominated its home turf of Washington-Baltimore for years, the privately owned company was not quick to expand. Blockbuster, on the other hand, wooed Wall Street investors with its aggressive growth plans, and embarked on a program of building stores and acquiring competitors.

Just last month it capped off the year by agreeing to purchase Erol's for $40 million.

Tower Video, another giant, is something of a special case. It's the only music-and-video chain that derives at least 30 percent of its business from video software sales and rentals. Tower has staked out different territory: sales of cassettes account for 59 percent of its video revenue. In fact, some Tower video departments don't even offer rentals.

It's worth noting that as such, Tower is at the forefront of a significant shift in the video business. In the last few years, the studios have learned that certain movies will sell so well if priced below $25 that they can practically ignore the rental market. The best example of that fact this Christmas is Touchstone Home Video's heavy TV advertising campaign for "Pretty Woman," calling it the perfect gift at $19.99.

Campaigns such as this have been so successful that, according to industry estimates, 1990 will represent the first year when sales to the consumer earned more for the studios (about $1.95 billion) than sales to the rental dealer (about $1.9 billion).

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