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Still here after all these years

Newhall movie-rental store endured several waves of competition, credits survival to service, prices

Posted: March 8, 2012 2:00 a.m.
Updated: March 8, 2012 2:00 a.m.

From left, John Lee, Gina Lee and Brian Dennis at Video Depot, an independent movie-rental store, in Newhall Tuesday.

 

What goes around comes around, as the old expression goes After having been in business for 28 years, owner John Lee of Video Depot in Santa Clarita has seen all the independent movie-rental stores disappear while the chains took over the market, pushing the “little guys” out.

Today, the chain rental stores are going out of business while the small rental business owned by Lee and his wife, Gina, are still going strong.

The small businesses once spread across the American landscape, until Blockbuster plowed its way into every market — only to be followed by Hollywood Video. Small-business owners couldn’t compete against the prices or inventory offered by the chains.

The big guys

The independent video-rental store business model perished rapidly as customers were lured away, but the market shifted dramatically as cable and satellite dish companies began offering movies in the convenience of one’s own home. Next came the Internet service companies giants, such as AT&T, that also provide movie broadcast services to home viewers.

And RedBox reinvented the rental business by offering movies from vending machines, eliminating all overhead costs of running a brick-and-mortar store.

Netflix began offering Internet video-streaming services to customers in 2008.  By May 2010, Hollywood Video filed for bankruptcy, as did Blockbuster in September 2010.

Video Depot survived through it all.

Movie lover

Long before Netflix or the big movie-rental chain stores opened, Lee opened Video Depot in New-hall because he loves movies, he said, especially the classics. The new movies have too much violence for Lee. He prefers the romance and stories of the old movies.

“We have a lot of classic movies,” Lee said. “We had more than 4,000 classic movies on VHS, but they’re gone now. I’ve been collecting titles on DVDs now from over 100 other video stores.”

The former school teacher and current real estate agent also used to own a restaurant that his wife ran. And, although, he says it’s not easy to stay in the movie-rental business, he continues to run the business because it “just fits him,” he said.

A longtime local resident, Lee also owns the UPS store next to Video Depot on Lyons Boulevard. But the movie-rental business came first.

Business model

When small video-rental stores first opened, the business model was very different. Rental prices were much higher by today’s standards and customers paid $100 membership fees to rent videos at Video Depot.

The retail price for a VHS video at the time was over $100, Lee said.

Membership fees later dropped to $50, and with the introduction of the chain stores, fees were dropped altogether. A new customer only needed to place a credit card on record.

“That was a really good time,” Lee said. “Customers came to our store to buy VCRs and camcorders because there were no WalMarts back then. We sold a lot of equipment back then, especially at Christmas.”

But times have changed, Lee said. Whereas Blockbuster and Hollywood Video stores once moved into retail centers throughout the Santa Clarita Valley, almost all have closed or will close, Lee said.

“But we’re still here.”

Key to success

Staying in business for nearly three decades hasn’t always been easy. About four years ago, Video Depot had to move to a smaller location to afford the rent, downsizing from a 4,000-square-foot store front to a store one-half its size.

The movie-rental store’s success is achieved due to customer service and pricing, Lee said. His story rents out movies on DVD and Blu-Ray discs for $2.75 and $3.60, respectively. And, as the chain stores went under financially, they retreated from their liberal rental policies, but Video Depot continues to offer new releases for two days and non-new releases for five days.

Lee’s other key to success, he says, is employee Brian Dennis.

“Brian knows lots of movies,” Lee said. “He watches three movies a day, knows all the titles and makes recommendations to customers.”

With parents who specialized in props and worked in the industry, Dennis said he’s been interested in movies ever since he was a little kid.

Customers sometimes come in to the store recalling just a few details about a film, but can’t remember the title of the film.

“I have a little bit of a ‘Rain Man’ quality to me,” Dennis said. “I just remember very specific things about films and help them find the movie they want.”

Video Depot’s best feature, Dennis said, is that the store has that small-town feel. The Lees and Dennis know everyone’s name, he said. And he really likes being there to assist the customers.

“John and Gina are great to work for,” Dennis said. “They’re really great with customers, and it’s a great working environment.” 

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