As Blockbuster Video is down to only one location in the entire United States in this age of digital video, and book and video chain Hastings has also shut its doors, it may come as a surprise that there’s another chain video store, Family Video, that is not only surviving but thriving, still 700 locations strong. Does its success story, as reported in Newsweek, offer any hints to the beleagured Barnes & Noble, also in the process of being driven out of business partly due to digital media?
Possibly, but the biggest reason Family Video is still around wouldn’t benefit B&N without recourse to a time machine. It comes down to a decision Family Video’s founder made forty years ago, when home video was still a brand new technology. Because it was still all so new, founder Charlie Hoogland made the decision that they would not rent space for their locations (like competitor Blockbuster did)—instead, they would buy and develop the property outright. That way, if home video became unsustainable overnight, they would still have the assets of those fully-owned locations, which they could then rent, sell, or repurpose into something else.
It was a wise decision back then, because home video was still such new technology. The Supreme Court had only just found that it was legal fair use, and the studios were still having some issues with the idea of home video movie rentals. For all Hoogland knew, a business built on such a new and untested technology might very well become unstainainable overnight because of some new legal decision or licensing requirement. Of course, the business didn’t become unsustainable, and went on uninterrupted for well over thirty years.
But in the present-day, owning their own locations meant they couldn’t be forced out by fading profits, and they were able to “right-size” failing stores—decreasing floor space as performance declined and renting out the leftover space to other franchises, such as Marco’s Pizza. They also entered into a partnership with Marco’s Pizza, so that people who ordered a pizza for delivery could rent or return a movie at the same time without having to leave their house—a fairly clever way of almost duplicating some of the stay-at-home convenience of digital streaming video.
Charlie Hoogland’s son Keith, the current president of Family Video, also credits the business’s long-term survival to a difference in outlook from corporate franchises.
While the entrepreneur cautioned Newsweek about giving him too much time to talk about the differences between public and private businesses, he explained that he doesn’t run the family company based on quarterly profits. Instead Hoogland focuses on building something that will “last,” looking out 20 to 30 years and even generations.
“The feel of the business is different,” he said, adding that both employees and customers can tell that they’re working at and frequenting a family business, respectively.
Family Video also has a strong tradition of giving back to the community, offering free rentals of children’s video, free movie rentals for good grades on children’s report cards, and community outreach and fundraising efforts.
Customers Newsweek interviewed credit the video store with offering the ability to browse through and discover new titles in a way that Netflix simply couldn’t (which seems to echo similar comparisons of physical bookstores to ebook stores).
And Keith Hoogland is also looking ahead to the day when home video might no longer be a sustainable business—though for Family as it is now, it’s more likely to be a slow dwindle than to happen overnight. He has some ideas about how the stores might adapt when customers are no longer interested in movie rentals.
“We’re going to transition the video business to where we’re kind of doing phones and then hopefully we’ll find something else like virtual reality or something that we’ll put in instead of video,” he said.
I noticed that there was a Family Video location at 10th and Emerson, just a mile from where I live, and out of curiousity I bicycled up there to have a look around. I found a spacious, neat, well-organized store with many shelves for rental movies and used-disc sales, as well as a freezer bin for ice cream treats. When I remarked to the counter clerk that I hadn’t been in a video rental place like this in years, she said she heard that a lot from people.
I was also interested to notice that Family Video is now selling packed-in digital movie codes, in the wake of the Redbox first-sale decision in which the judge found that studios couldn’t use shrink-wrap licenses to prevent unbundling. Indeed, since the other video rental chains collapsed, Redbox must be Family’s biggest direct competitor now, so it’s not surprising they would “keep up with the Joneses.”
Is there anything Barnes & Noble can take from this? It’s probably too late for them to buy and own their own stores if they don’t already. That means that when their business can no longer support paying the lease, out they go. They don’t have room to experiment with switching to a new line of business if books fade (and, honestly, their attempts to do so in the past, as with the Nook, have fizzled pretty badly). And I’ve never heard of them doing much in the way of community outreach.
But Charlie Hoogland’s original insight into the risks of building a business around new technology could be a good lesson to so many start-ups these days—businesses experimenting with ebooks, tablets, electric scooter rentals, and so on. Can you build a parachute into your business plan, so you have assets that won’t go away if your primary business fails?
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