Global Industry Overview: Video Tape Rental and Retail

The global video industry includes outlets that rent and sell video tapes, DVDs (digital video discs), and related items to the general public. See also Motion Picture Production and Distribution.

Industry Snapshot

The global video rental industry looked as if its best performance days were behind it by 2005. Although revenue figures for home video entertainment were on the rise and sales of DVDs had been growing far more rapidly than the declines in VHS sales, rental revenues were continuing to fall. Piracy issues, competition from video-on-demand, and the trend of consumers to buy DVDs and then trade them in, were all having a strong affect on the industry.

Beginning in 1999 with the creation of Internet-based Netflix, the video rental and retail industry joined the ranks of other industries finding success with e-commerce. By 2005, Netflix boasted 40 million DVDs and 3 million subscribers. Other upstart companies such as California-based QwikFliks hoped to cash in on the enormous and growing online DVD rental business, as did Video Island and other companies in the United Kingdom. Even brick-and-mortar players, including international behemoth Blockbuster, jumped into the world of online DVD rentals; Blockbuster launched its offering in 2004, first to the U.K. market and then to the U.S. market. Discount giant Wal-Mart also was a player in this niche, and in 2003 it surpassed Blockbuster for the first time in terms of video sales. Due to reduced overhead fees, such operations could keep a far greater selection of titles than a traditional store could even dream about.