Every time I pass a Family Video rental store, I wonder to myself, "How the heck is that place still in business?"
It's not that I want them gone. No way. In fact, I love the nostalgia factor of walking the aisles with my kids and browsing the discs like we used to do in the olden days.
But in the digital age, the idea of actually getting off the couch and traveling to a store to rent a movie, rather than remaining on that couch and hitting the "On Demand" button, seems downright archaic.
Sure, you might walk over to pick up a rental on a lazy summer day for fun, but probably only as often as you make pizza from scratch rather than having it delivered.
Blockbuster famously imploded nearly a decade ago, though a handful of holdout stores in Alaska and Oregon somehow plodded along until last month. Redbox's DVD kiosks, which helped bring Blockbuster down, are "doomed" according to Variety magazine, though Redbox is charging ahead with its streaming service. Indy rental stores and the video rental sections of grocery stores have gone away, too.
Yet Family Video has more than 750 locations, including seven in Erie and Niagara Counties, and its owner Keith Hoogland has an estimated net worth of $400 million.
So how is Family Video still around?
Turns out, Family Video is in the real estate business as much as it is in the movie rental business. Maybe even more so.
Since the company opened in 1978, its has bought its properties rather than leasing them, with the idea that it could sell or lease the real estate if the video business ever went under. Family Video constructs whole plazas in some places, with rental fees paying off the mortgages. It fills spaces with partner companies (as it did with Marco's Pizza), its own concepts (such as its Stay Fit 24 gyms), or leases them to other merchants.
The former Family Video store and Marco's Pizza on Hertel Avenue are a perfect example. Though the company closed them in April, it still owns the property in what is now a hot real estate district. It leases part of it to the popular Poutine and Cream restaurant and is building out the rest.
And as the square footage of Family Video store has decreased over time, it has been able to carve out the unneeded space and lease that, too, reducing Family Video's operation costs and increasing its profits.
So, while revenues from Family Video have declined, the company stays afloat. Because the real estate is so profitable, the video stores themselves don't have to pull as much weight.
The Illinois-based Family Video also operates many of its stores in the Midwest and rural areas, where access to the high-speed internet needed to stream movies can be limited. Copyright issues are also looser for physical copies of movies than digital ones, meaning new releases can hit Family Video shelves sometimes months before Netflix or Hulu.
And there are still some people — baby boomers, families with kids and those who haven’t embraced digital technology — who simply prefer to rent movies the old-fashioned way.