Investing

Barnes and Noble DVD by Mail Rental Service

It appears I chose well when the date November 13, 2013 became a pivotal date in “John Smith – Last Known Survivor of the Microsoft Wars” as that also seems to be the date Block Buster stopped shipping DVDs by mail. This is leaving a lot of people in a mad scramble since DVDs by mail was a very convenient thing. No late fees and unlimited plans allowed you to watch a good number of movies each month if you had the time.
Flat monthly billing also had the side benefit of expanding the number of viewers willing to watch documentaries. I’m old enough to remember the days of paying $7 to rent a VHS tape. When I had to pay per movie there was no way I was going to pay to watch a documentary unless it was at least as famous as “Roger and Me”.

Whatever Dish hopes to achieve by shutting down the DVD by mail and retail locations isn’t going to happen. Speaking as someone who tried Dish in the past, it feuken blows. Having talked with people who currently subscribe to it, the service hasn’t gotten any better.

We have DirecTV out on the farm. We never rent movies through it. Why? I have to pay for each one I watch and I’m simply not going to do that. Now that STARZ is focusing more on its own series production than new movies the days are numbered for us subscribing to even that plan. Honestly, I watch roughly two movies per month on STARZ which I haven’t seen before.

If there wasn’t someone in the house who likes the Western channel, we wouldn’t have it. If I could teach that person how to operate the DVD player (don’t ask) the STARZ package would have long since been gone. I have been cruising the video clearance bins at both Big Lots and KMart whenever I’m in those stores. I have picked up a large pile of western, John Wayne, and Clint Eastwood movies for less than $7, most for $3. Some of the things are multi-DVD packs containing 5-12 movies. Many of these titles are the same ones the Western channel runs.

All of this leads to an interesting thought. What if Barnes & Noble gets into the DVD by mail business with in-store exchanges like BlockBuster had? Barnes & Noble has been doing many things trying to drive more traffic into their stores including the addition of toys, movies, music and many other products. How about a simple and low square footage solution? How about a DVD by mail service with in-store exchanges combined with a special section of the store, tiny, about two book racks in size, where they keep only new releases for rental? It would take a bit of doing to set up the rental system, but they don’t have to re-invent the wheel. Barnes & Noble already has large retail locations so the cost of initial setup could be viewed as an advertising campaign. Could it really cost more to setup than the holiday commercials they are currently running?

There is a big pile of BlockBuster customers now twisting in the breeze. Many won’t go back to Netflix because they’ve been there and bailed, myself included. If Barnes & Noble were to offer this service they would tap a market which has been unavailable to them. That would be a customer base which neither reads books nor goes into a book store.

Seriously, you’ve all bought a DVD at some point. How did you buy it? Did you go into a book store to get it or did you pick it up from a clearance bin? Even if you did buy it from Barnes & Noble you probably bought it via the Web site without ever going into the store. You would go into a book store if it was to exchange a rental. While you are there you might buy a coffee or something else which catches your eye on the way in or at the check out counter.

I do hope Barnes and Noble takes a serious look at this business. It would allow them to compete in a market segment Amazon simply can’t get into. True, Amazon can rent streaming video. They might even be willing to setup a DVD by mail service, but they can’t do in-store exchanges. So, when it is a rainy Sunday with nothing on television and you’ve watched your last movie, what are you going to do? I’m going to do an in-store exchange even if I have to drive 20 miles to the nearest Barnes and Noble to do it. I might even take all 3 of my 3-at-a-time subscription plan because if it is a nasty weekend I’ve just watched them all. Who knows what I’ll buy while I’m there. I read books, but I tend to buy them from the Web site only after I’ve heard quite a bit about them.

This idea should make money for Barnes & Noble, but even if it doesn’t directly make money, it increases store traffic.  So if it breaks even on cost it can increase per store revenue with the impulse buys and maybe increase the “regular” customer base.