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Video stores close, shrink as new deliveries change habits

Movie Gallery Inc. is closing all its stores as part of a May bankruptcy filing, including Hollywood Video in south Moorhead, which closes today. The video rental store is liquidating everything, including movies, video games, DVD cases, shelving and its televisions. Chris Franz / The Forum

In the midst of a remodeling project that cut the size of Take 2 Video in half, a hand-written sign was placed outside letting passers-by on South University Drive know the video rental store was still open.

"When they see the construction, I would assume the worst as well," said store manager Nathan Lampl.

After all, changes in the rental landscape have not been kind to these brick-and-mortar businesses.

Ever-changing movie and video game formats, online and kiosk competitors, pay-per-view TV and digital TV recorders and cheaper DVD purchase prices have been serious challenges for the industry.

The examples are all around.

Movie Gallery Inc. is closing all of its stores as part of a May bankruptcy filing, including Hollywood Video in Moorhead. The store will close today, said manager Travis Schiesser.

Movie Gallery stores in Detroit Lakes and Fergus Falls, Minn., closed earlier this month, Schiesser said, and Hollywood Video stores in Grand Forks and Minot, N.D., are in the same leg of closures.

And while the locally owned Take 2 Video store at 2790 S. University Drive, Fargo, isn't closing, a Verizon retailer is moving into about half of its former space. Lampl said the addition of a new business would also add foot traffic.

"We're just perfect now," he said. "Snug."

The store removed some of its older titles as it downsized. Its streamlined inventory is heavy on new releases, TV shows, video games, family and special-interest DVDs, like comedy specials and foreign films, Lampl said.

Marty Riske, who owns Take 2 Video and the South University Drive building, said the nature of the video business has become mostly new releases.

"The need to house hundreds of older titles just no longer is economically feasible," Riske said.

Take 2 Video's north Fargo store still has its complete catalogue, Lampl said. In 2009, a Take 2 Video location on Fargo's 45th Street South transitioned into Vidcycle, a sister company that buys and sells games and movies. There is also a Vidcycle at 3109 13th Ave. S., former home of Take 2 Video Outlet.

"We're just happy to still be a competitor in this crazy, crazy rental industry," Lampl said.

Writing on the wall

Since word of its closure, Hollywood Video in Moorhead has been selling its inventory, as well as that of other locations. Schiesser said 27,000 titles were shipped to the Moorhead store during liquidation.

Schiesser said customers have expressed disappointment and often ask why the store is closing.

His answer is simple: "The writing has been on the wall," said Schiesser, an 11-year Hollywood Video employee.

"It's a struggle for a lot of companies to keep up with the changes," Schiesser said.

Blockbuster announced last fall it would close as many as 960 corporate-owned stores by 2011. Its first-quarter financial results showed a net loss of $65.4 million.

Meanwhile, Netflix, which offers movies by mail and streaming online, announced July 21 a net income of $43.5 million in second-quarter results, a 34 percent jump from last year. And Coinstar Inc., the parent company of Redbox, with its $1-a-day DVD kiosks, is expected to announce a 21 percent sales increase in its second-quarter figures today, Bloomberg reported.

Fargo's two Blockbuster locations are franchised stores, so would not be among those closed, said Kevin Seeger, managing partner of North Central Management Group, the franchisee and operator of Blockbuster stores in the tri-state area.

"Fargo-Moorhead has always been a strong market for us," he said.

Seeger said the closure of Movie Gallery and Hollywood Video, which he called Blockbuster's largest competitor, will positively affect the Fargo stores, as will agreements with major movie studios that put the majority of new releases on the shelves of brick-and-mortar stores 28 days before they're available through other delivery methods.

Seeger said his group doesn't foresee any change in the way its stores do business for the next three to five years.

"There still are a lot of people that see value in coming to a location like Blockbuster and renting a movie," he said.

But, he added, local franchisees will benefit as Blockbuster transitions into new delivery options.

Customer focus

Meanwhile, local video retailers hope having new releases first and their customer service will keep them afloat.

"As long as we can provide the same service we always have and movie knowledge, whatever changes come, we'll always be one step ahead," Lampl said.

Riske noted he started Take 2 Video in 1985. "Most anything over a 25-year span changes, ebbs and flows," he said. "It's still a viable business. It's just not the crazy boom years that it was in the '90s and early 2000s."

Kerry Helland, store manager of Moorhead's Premiere Video, credits a loyal customer base and consistently low prices with her store staying open. She's been with the company, a regional chain, since 1994.

"I've watched kids grow up. I've had a lot of people who've rented here since I've been here. I recognize faces," she said.

"It's really still a neighborhood kind of thing to run to the video store and get a movie for the family," she said.