VCR, VHS Video Tape , Video Store, DVD, DVDs by Mail, Video On Demand, Live-Streaming and Blockbuster

Posted by PITHOCRATES - December 11th, 2012

History 101

The VCR changed the way Families enjoyed Movie Night

The video cassette recorder (VCR) changed the way we watched movies.  Well, some of us.  For the first VCRs were really expensive.  The first ones costing as much as a car.  But by the Eighties the price fell to a few thousand dollars and within the price range of those who really wanted one.  And buy them we did.  Recording everything we wanted on television.  Many of us old enough to have lived during the Eighties no doubt have a box of video tapes we push around occasionally.  Having long forgotten what is on those tapes.  Yet we still push that box around.  Sure that there must be something good on at least one of those tapes.

Recording things off the television was one thing.  But watching movies was another.  For it was expensive to take the family to the movie theater.  Especially if you had three kids or more.  Twenty bucks for tickets.  Another twenty for popcorn, candy and drinks.  A night at the movies could cost a family $40 or more.  If you went to the movies once a week that could add up to nearly a car payment.  Which made taking the family out to the movies a very expensive endeavor.  If there was only another way for the family to enjoy movie night.

And then it happened.  They started releasing movies on video tape.  The same movies that had played in the theaters.  They weren’t cheap.  The first movies cost as much as $80 or more.  But once you paid that $80 you could watch that movie as often as you wanted.  With as many people as you wanted.  And eat as much popcorn, candy and drinks you wanted.  Even adult beverages without the worry of having to drive home.  Yes, the VCR changed the way some of us watched movies.  Those who could afford to pay $80 or more for a movie on video tape.  But there was another option for those less financially endowed.  The video store.

To Help Augment their Income Video Stores started to sell Popcorn, Candy and Drinks

Some of the first video stores required an annual membership fee.  Which wasn’t cheap.  As well as a rental fee for the movies you rented.  Did these stores rake in the money because they were so greedy?  Not really.  Remember that in those early days these stores were paying $80 for their videos.  If they had 3 copies (on average) of each that’s $240 a title.  If they had 300 hundred titles in their store that came to $72,000 in video tapes.  Anyone who has ever rented video tapes knows that they weren’t always the best of quality.  When you place a video tape into a VCR and press play a magnetic head presses against the tape.  This constant pressure and friction wears the tape out over time.

So after spending some $72,000 to stock their store they probably had to replace at least one of each title for 20% of their stock each year.  Adding another $4,800 in costs.  As well as buying some new titles with every new release.  Five copies of two new releases a month would add another $9,600 a year.  So after spending some $72,000 to stock the store they probably spent another $15,000 a year on additional video tape purchases.  Add in rent, utilities, interest on their debt, insurance, a paycheck for the owner and an employee or two that little video store could cost up to $250,000 a year to operate.  All of which they had to recover from rental fees and membership fees.  And the occasional rewind fee for those who forgot to be kind and rewind.

In time those video tape prices came down.  Allowing video stores to drop their membership fees.  They may not have liked losing that large source of income.  But it was either that or see their customers go to the stores without the membership fees.  To help augment their income video stores started to sell popcorn, candy and drinks.  Just like the theaters.  For what is a movie without popcorn, candy and drinks?  Instead of movies these stores now rented a family night together.  A one-stop shop to rent some competitively priced videos.  And to load up with some not so competitively priced snacks.  The snacks may have been a little on the pricy side.  But they were convenient.  Allowing family night to begin sooner without having to make another stop to buy some groceries.

DVDs by Mail, Live-Streaming Movies and Video On Demand put the Familiar Video Store out of Business

The VHS video tape dominated the entertainment market until the DVD came along.  A small flat disc.  Much simpler.  With no moving parts.  And you never had to rewind a DVD.  Putting the video tape rewind machine manufacturers out of business.  They could manufacture DVDs so inexpensively that they changed the model for home entertainment.  Going from renting to purchasing.  Video stores stocked DVDs to rent.  But as the DVD price fell further it was difficult to rent them.  For if someone could buy a new release for about $15 you really couldn’t charge much to rent it.  Making it difficult for the video stores to stay in business.  They could sell DVDs instead of renting them.  But it was the big box retailers that had the best prices on DVDs.

Because the DVD was so small and light there was something else you could do with it.  You could mail it.  So instead of going to a video store only to see the movie that you wanted to rent was out of stock you simply went online.  And rented the movie you wanted and some distribution warehouse mailed one of their many copies to you.  Some companies let you keep the movie as long as you wanted without any late fees.  Forever eliminating those late night drives to the video store before midnight in your pajamas to drop the video in a drop box before that late fee kicked in.  The DVD is so convenient to handle that they can even put them into vending machines at your grocery store.

With the ability to see almost any movie you wanted to see without having to go to a video store made it difficult for the video stores to remain in business.  For they were trying to compete with other businesses that didn’t have to pay rent, utilities, interest on their debt, insurance, a paycheck for the owner and an employee or two.  While their costs went up the prevailing market price to watch a movie in the home fell.  Then came movies on demand from cable providers.  And live-streaming on the Internet.  Which didn’t even need a distribution warehouse or a massive inventory of DVDs.  Or warehouse employees.  Movies just sat on a server connected to the Internet.  Which is why it is difficult to walk into a Blockbuster video store these days.  (Blockbuster basically invented the big box video store.)  But you’ll be able to rent a DVD by mail, live-stream a movie online or watch a video on demand from Blockbuster.  The new business model allowing them to remain in business at the prevailing market price to watch a movie in the home.  Unlike the old model based on brick and mortar stores that led to their bankruptcy.

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