with 'video store' tag

i don’t think that deal means what you think it means

so blockbuster and the weinstein co. have announced that blockbuster signed a deal to be the exclusive renter for weinstein co. films.

too bad there is no such thing as rental rights. i suggest some of the people involved may want to read up on the first-sale doctrine.

all i can see this meaning is that netflix will end up paying less favorable rates for the weinstein co. films that they choose to stock, and weinstein co.’s less successful films will have even poorer distribution. but if weinstein co. releases a successful film and ever sells it on dvd, there is no way that netflix is not going to carry it.

at some point, the historic downtown los angeles retail project snuck online with a website. los angeles downtown news reports that the project helped twenty new businesses open since it started two years ago. still no video store, though.

movie gallery projected a weak sales outlook — they’re the video rental chain that focuses mainly on smaller communities.

locally, video action at 1st and hope just announced that they’re closing at the end of the month unless they find a buyer — after 24 years of operation. and eric recently reported that there’s a video store looking to open in the old bank district in the fall.

i found it fairly difficult to get past the self-satisfied writing in this la weekly article about main street in downtown (via blogdowntown).

i wouldn’t characterize the old bank district lofts as particularly fancy, as the writer does. one of the things that attracted me to them is that they are pretty basic.

and alice callahan comes across as a tremendous jerk for someone who provides social services to the homeless. i’m glad i don’t share that zero-sum view of the world.

wired says that it doesn’t matter which high-definition dvd becomes king, because online distribution will rule them all. that sounds about right. there’s also some comments about what this means for the neighborhood video store. the video store owner strikes me as the least optimistic. that says something.

spring has sprung

which means that i’ve entered allergy hell until my system readjusts.

but today was “spring on spring,” a self-guided walking tour of various places on spring street in downtown. almost all of the places on the tour were notable, including the stock exchange nightclub, which is on what used to be the trading floor of the pacific stock exchange, with the four trading desks turned into bars; the vault of the old los angeles trust and savings bank that is being turned into a bar by the same folks that are behind the golden gopher; the lobby of the el dorado hotel, which is being converted into for-sale lofts; and one of the finished lofts in the douglas building (which is amazing, but $400,000 for 1200ft²?). the disappointment was the lofts in the mercantile arcade building, which were just badly finished.

with all this residential and retail activity, i’d wish somebody would open a decent video rental store already. it’s the idea that just won’t die.

next?

once i’ve finally found a new home for blo.gs (and i resisted the temptation to do some sort of april fools gag about that), i’ll once again have a dedicated server with some bandwidth to spare.

maybe i should dust off one of the domain names i have laying around, like microcommunity.net, and figure out what to do with it.

another domain i registered and actually started building the site for was battleforlosangeles.com. the idea was to do a site focused on los angeles politics and the mayoral race in particular. but then the mayoral primary election got underway, and i quickly realized that folks like kevin roderick of la observed and brian hay of the hertzberg daily digest were going to do a much better job of covering things than i had the time (or knowledge) to do.

and keymovies.com is the domain i registered to register for last year’s home entertainment expo, and to otherwise be able to do my video store research via something a little bit removed from this site.

but before i do anything new, i will probably tinker with this site some more. i need to make it possible to browse using the tags, and probably will restructure the archives while i’m at it. maybe i’ll think about packaging up the code for this site as yet another open source blogging tool.

or maybe i should do something that doesn’t involve programming. or computers.

prepaid plans and subscriptions as self-imposed consumption quotas

like i said, midas world is thought-provoking. and as i was juggling a few items in my long-neglected netflix queue, i started to wonder if you couldn’t think about monthly service plans as a sort of self-imposed consumption quota.

(downtown los angeles still badly needs a video rental store.)

downtown is uptown?

according to the los angeles downtown news, the new residents of downtown los angeles are rich. or in any case, outside of the middle class that richard riordan, eli broad, and a member of the governator’s administration talked about at a zócalo event last week.

here’s the original study, and thanks to eric at blogdowntown for digging up that link.

the article mentions that the study is being used as a tool to try and lure trader joe’s downtown, which i’ve already said is a good idea. in fact, when i was checking out at trader joe’s (in pasadena) on saturday, they asked for my zip code. hopefully that’s another data point in favor of a downtown location.

something that has been on mind as we’ve entered this new year is how i could be more effectively investing my money. part of my thinking is that i would love to find a way to put it to use locally. i would very much love to start a small business, even something in the retail space like that old video store idea, but that desire is still overwhelmed by the reality that i have a job that pays well and that i enjoy. maybe what i need to find is someone who wants to open something but needs some (modest) financial backing.

one quote from the study: “strong potential demand for … video stores.”

downtown retail development

here’s something extracted from the newdowntown mailing list archives, which is only open to members. (i’m not sure why, considering membership is not moderated, and yahoo! groups castrates email addresses in the messages.)

In reference to the question about a program for vacant storefronts....here's a brief summary of the program and its goals.

The Historic Downtown Los Angeles Retail Project and the Downtown Amenities Group Convened by Mayor Hahn's Office of Economic Development, the Downtown Amenities Group is a working group of Downtown LA stakeholders (City Council staff, City department staff, the LA Conservancy, property owners, retail consultants, residents, etc.) who seek to attract new retail and other amenities to Downtown vacancies. While Downtown welcomes major-credit anchor tenants, we believe that Historic Downtown's success as a thriving, 24-hour community for residents, tourists, business, and others is ultimately dependent on the creation of small retail/service/entertainment/arts establishments.

With a philosophy that "occupied storefronts build a neighborhood," we seek to attract unique amenities to Downtown Los Angeles vacancies. As a result of the work of the Downtown Amenities Group, the City created the Historic Downtown Los Angeles Retail Project, also known as the Targeted Retail Initiative.

This is a City program administered by the Community Development Department (CDD) with input and oversight provided by the Mayor's Office of Economic Development and other Downtown stakeholders. This program has contracted with VEDC to provide a project manager/retail consultant and a project assistant whose sole mission is to attract, retain and expand street-level retail and other small businesses to Historic Downtown. The primary service area is between 3rd and 9th Streets to the north and south, and Main and Hill Streets to the east and west. Minority and women-owned firms are also a focus of this project. The consultant team will assist with site location, business plans, marketing, inventory issues, access to capital and financing issues.

The Mayor's Office of Economic Development provides permitting assistance, identification of possible financial resources and City incentives, and other facilitation on an as needed basis. Services are available to new businesses, businesses interested in relocating within the project area, and existing businesses within the project area.

The Historic Downtown Retail Project has opened a Downtown office location at 315 W. 9th St. (at Hill St). The project currently has nearly 40 clients and is pursuing relationships with additional clients. The project team has also hosted or co-hosted several workshops in Historic Downtown to promote business opportunities to new and existing businesses. A comprehensive Historic Downtown marketing and business attraction package is in development and will be complete in late November 2004. A City-funded loan loss reserve program for these businesses is also in development. This program will largely be used to leverage financing for tenant improvements for small businesses within the project area.

The Downtown Amenities Group and the Historic Downtown Los Angeles Retail Project also work collaboratively with the Gallery Row Organization, which is a separate group that is focused on attracting galleries and related uses to Historic Downtown.

For more information and/or consulting services, please contact Warren Cooley or Audrey Madrigal with the Historic Downtown Los Angeles Retail Project at 213-488-3599.

For permit facilitation and assistance with City departments, please contact Tara Devine, Downtown LA Economic Development Representative for Mayor James K. Hahn, at [email protected]

there’s a tiny bit of other info about the targeted retail program and other los angeles business incentive programs on the city website.

this week’s los angeles citybeat has another article about the maybe-downtown-boom. a quote that jumped out at me: “Already, Gilmore [developer of the old bank district, where i live] says he’s inundated with retailers who want to put shops, cafés, and bars of all types in the ground floors of his buildings.” that would explain the empty storefronts in the continental and hellman buildings. (but warung café did finally open, although inexplicably only for breakfast and dinner at first. it seems like they’ve avoided the one time of day when there’s a chance they’d draw a healthy crowd.)

the video store is an idea that haunts me. maybe i should start playing the lottery.

a while back, i mentioned that i had a simple spreadsheet that i was using to play around with numbers for a video store. here it is for those that want to play around with it. (start-up costs of about $100,000, and annual costs of over $200,000. but those are very loose numbers, obviously.)

the trigger cases from 5inch.com are pretty nifty. (as are all of the printed cd-r, too.)

vsda home entertainment 2004 notes

here are my notes from the various sessions i attended at home entertainment 2004 a few weeks ago.

wednesday, july 14

morning session: “isn’t that special – differentiating your store”

this session focused mainly on the experience of two owners, both with fairly large stores that have incorporated other businesses into the same store. the first was a 7,000 square foot store in a small town (population about 25,000) in iowa, which included tanning, gift sales, snack sales, and a rented-out mobile phone area. the other was someone who has been in the industry for 22 years, after having sold out two different times. he’s based in new jersey, with two stores. the one he talked about was about 10,000 square feet, which included a pinball arcade (!), novelty candy sales (and a regional soda), and home entertainment sales and installation (not really a circuit city sort of deal — the focus is on installations). previously he had tried incorporating a cafe, but did not have much luck with it.

afternoon session: “from the ground up — the launch of vsda’s igroup”

as i’ve been able to piece together the history, the vsda basically got bogged down by the shifting currents of the industry (growth of the chains, etc), and what is now idea (independent dealers of entertainment association), or the igroup, was formed as a way of reviving the trade organization from the independent retailer perspective. this session was basically a chance for the board to talk about the goals of the group, and just have a discussion with the membership that is at the show.

afternoon session: “are they management material? provide a complete education to your store managers with the vsda institute”

this was a short presentation about the training programs that the vsda offers, including a portion of the course about how to hire employees. it looks like solid material, and the cost is fairly modest ($30 a course, whether you take it on-line or in-person).

afternoon session: “now that’s a concept! the latest developments in video retailing”

this was actually three presentations in one: the first by bob tollini, a consultant taking a look at dvd rental vending machines. as he put it, it is currently a $0 billion market in the united states (although rental by vending has a foothold in europe). mcdonald’s is making a splash in this area with their apparent willingness to put in their own dvd rental machines (although i wonder how this really works with a franchiser) and use them as a loss-leader to get people in to buy food. obviously they can’t offer the depth of selection that a video store can, but they can offer the top new releases, and without much overhead beyond the initial machine cost and ongoing cost of the movies. and someone like mcdonald’s could have enough leverage to be getting movies at steep discounts.

the second presentation was by richard langdon, the cio of movie gallery, a large chain that focuses on smaller markets and locations, about the use of item-level rfid. they have run a couple of trials, but the only real advantage they found was in reducing the time required to do a full store inventory. the price of the tags and readers is still too high for it to be a no-brainer to implement, but that will just take time, i suspect.

the last presentation was by sean beauchamp and his partner from rentshark, a vendor of software solutions for online video retailers. since they weren’t allowed to pitch their own products, they just gave a bit of an overview of some of the issues facing video retails, especially from online. because they don’t really have a history in the video retail and rental industry, they brought both the bad and good of an outsider’s perspective. a sort of naïvety about what things will take off (like time-limited dvds and drive-thru rental stores), but also no large preconceptions of things that have to be done to be successful.

thursday, july 15

morning session: “marketing workshop 101: part 1 — advertising & marketing for the independent store”

this was exactly what the title promised: an introduction to retail marketing, with lots of good advice about how to promote your business. none of it was really specific to video retailers, and it had a bit of a small-town flavor, but it was all solid information. one key take away: you should budget between 4-7% of gross sales for promotion (including advertising, newsletters, in-store promotion, and community sponsorships).

morning session: “a conversation with adam glasser — studio views on adult retailing”

i couldn’t resist playing tourist here, and checking out what adam (aka seymour butts, and star of showtime’s family business) had to say. i was a little surprised at how sparsely attended it was. he just talked about his perspective on what retailers could be doing, based on his experience as a frequent visitor to stores all over the country (and world). the thing that kept coming to my mind is how victoria’s secret created the now very large lingerie market, as detailed in trading up: the new american luxury — who’s going to do the same thing for the adult industry? larry flynt and hustler are sort of acting as ground-breakers here with their store in hollywood, which is more like a borders than your stereotypical dingy adult store.

a footnote: adam gave out his email address, which was just an email address with an internet service provider. it surprises me when people use accounts like that for their business, since it invariably causes problems when the provider merges with someone else, or just decides they need to rebrand and screw up the email address of all their customers. surely it makes more sense to drop the $10 to register a domain name (heck, i registered one for my non-existent video business) and the little bit it takes to have that email handled by someone like fastmail.fm.

morning session: “marketing workshop 101: part 2 — an independent’s guide to promotions & partnerships”

this was a continuation of the earlier session, with more examples about specific promotional ideas (again, with more of a general retail slant, and not specifically focused on video retailing), along with an explanation of how to track the results of the promotions.

afternoon session: “am i a rentailer or a retailer? how to make money on sellthrough”

according to the moderator, sellthrough is an average of 20% of a video retailer’s business, and two of the panelists represented small chains where the percentage was even higher (with one being mostly new sellthrough, even with the competition of retailer’s like wal-mart and best buy, who use dvds as loss leaders for their other merchandise).

it was a very interesting session, with a number of good numbers thrown out that help me put the rough spreadsheet i’ve been putting together into perspective. (the average size of video retailers is about 3,000 square feet. average gross revenues are less than $300,000.)

friday, july 16

morning session: “it’s a movie, it’s a game, it’s probably both”

this was a panel discussion focused on games. none of the panelists were involved in doing both movie and game rental (i believe — i arrived a bit late and so missed the full intros), but the information was still good. game rental is a tricky business, because of the high cost of the product (relative to dvds) and the longer rental periods. but the margins in used games are pretty huge (as with used movies), so it is a booming business.

morning session: “international”

there were a lot of characters at this session. a guy from germany talked about the anti-piracy efforts they’ve taken, and that was a big focus of the session. in some parts of europe, they have two-tier pricing that means rental stores can’t legally buy a retail-priced dvd and rent it out.

general thoughts on home entertainment 2004

i have some day-by-day notes on my laptop about the various sessions i attended, which i may post later. but overall, it was a good mid-sized conference, although i only really hung out along the edges, and didn’t take advantage of all of the things going on (partly because i didn’t spring for the all-access badge, and partly because i didn’t spend any time in the exhibitor suites).

and i find it extremely amusing that the conference grab-bag of promotional items included an adult film and a christian film.

vegas, baby!

so i bit the bullet and made plans to go to vegas next week for home entertainment 2004. unfortunately, i made the decision too late to actually register for the show beforehand, so i’ll have to try my luck at on-site registration. i need to pick up some perforated business cards so i can gin up some official-looking business cards and hopefully avoid the “registrations from the public will be denied” issue.

i’ll be staying at the new frontier, which had the important qualities of being cheap and relatively close to the venetian, where the show is being held.

this seriously ups the amount of money i’ve committed to this zany backup career plan. then again, it’s still way less than i’ve spent on the server and hosting for blo.gs and this site.

actually, i suppose “way less” may depend on how any gambling goes.

and i guess why i’m even considering a backup career plan is worth some explaining at some point. maybe later.

decisions suck

attending home entertainment 2004 (the video industry trade show) would cost about $1000. ($500 for the show, $300 for the air and hotel, and $200 for incidentals, more or less.)

i’ve certainly spent similar amounts of money on more frivolous things but i’d still give the likelihood of me ever going through with this video store idea pretty long odds.

early adopters abandoning dvd?

that’s what a report from changewave research derived from a survey of 4,000 executives says.

found: video rental stores downtown

the other day i finally tracked down a couple of video stores in downtown los angeles. they’re within a couple of blocks of each other in the bunker hill area. the one i went looking for, based on its phonebook listing, was global video, located at about 2nd and figueroa. the other one i stumbled across was video action, at 1st and hope.

they’re both independents, of course, and most of the space of both is taken up by vhs, although both have reasonably large dvd collections. global video has live displays (tapes/dvds are in the boxes on the shelves), and video action uses a dead (or closed) display system, with shelves full of video tapes behind

dvd rentals at video action were $2.50/night, with some specials whose details i’ve already forgotten, and dvd rentals at global video are $3/night.

i also visited three video stores in my old neighborhood earlier in the week — blockbuster video, hollywood video, and odyssey video. one thing that struck me about odyssey is how dingy it was. it hasn’t aged particularly well.

it surprises me how much of a contrast there is between the chain stores and the independents. both chains stores are much larger, and naturally they feel much less crowded as a result. at the two downtown, it felt like two people trying to look at the dvds would be crawling over each other just to be able to see things.

scoping the neighborhood

so i did what i don’t do nearly often enough,, and took a walk around downtown, mainly over towards little tokyo. i wanted to check out a few of the “video tape & dvd sales & rental” places listed in the yellow pages to make sure i hadn’t been overlooking anything.

the only one that did rentals was purely japanese films, and nearly all-vhs. (which is a little overwhelming when you don’t understand japanese at all. aisles full of vhs tapes with completely incomprehensible labels.)

the other places nearby (in that direction) are all sales. one focuses on anime and games, and the others are just part of the half-dozen or so discounters/wholesales that are part of the toy district.

there’s a few other places i need to check out in some other directions, but the market does seem to about as empty as i had suspected all along.

crunching numbers and figuring out the questions

so i’m crunching numbers on this whole dvd rental store idea, which is an interesting exercise. there’s still so many things i don’t know, but it’s fun. (i’m beginning to understand those people who enjoy playing with excel that i never really understood before.)

i’ve been building up layers of back-of-the-envelope calculations to determine how much shelving would fit in a hypothetical space, how many dvds that would hold, how many new movies (and to what depth) to buy, how many employees (and how much to pay) would be necessary based on hypothetical hours, and all sorts of other equations based on various variables. (how much should you charge for rentals? how long should the rental period be? what about late charges? what about a subscription plan?)

and when the crunching tells you things like you’d need to rent 18.42 movies per hour, or $801.35 per day, to break even, you go in and try to get better numbers for the ones you’ve just made haphazard guesses about.

it becomes clear pretty quickly that the single biggest monthly expense is new inventory. (but it can also be a revenue driver: what happens when you assume that you sell off half of the new inventory after five weeks as previously-viewed movies, after it has made 80% of the purchase cost in revenues?)

the modeling job i haven’t undertaken yet is to plug in the unit count for the various downtown developments (existing and planned), make up some sort of formulation of what percentage of those units would become customers based on the distance, and then figure out where the ideal location would be. it seems like it would be fun, even if it is probably a completely bogus exercise.

new bookmarks: the video store shopper and speciality store services are two places that sell store equipment for video retailers.

blockbuster franchising

the minimum financial requirements for a blockbuster franchise are a net worth of $400,000 with a liquidity of $100,000. a useful number to know as a benchmark.

vsda’s home entertainment 2004 is the trade show that encompasses the video retail market. it’s july 14-16 at the venetian in las vegas, and an all-access pass is $395 for non-members (before june 18 — after that it is $475).

here’s an article from library journal that is a round-up of disc repair machines.

a big mac and a movie

the motley fool reports that mcdonald’s is test-marketing dvd rentals (from a kiosk) at stores in colorado, washington, and las vegas. interesting statistic from the article: “the top 30 DVD rentals in video stores comprise 80% of video rentals.”

vomit (the video store management interface) is an open-source pos system for video stores, it uses php and mysql.

dvd distributors

bonus, two trade mags:

cddvdliquidation.com sells bulk lots of dvds, either just mixed assortments or by genre.

of course, a google search for “wholesale dvd” turns up lots more.

tradeoffs

one decision that one would have to make in setting up a dvd rental place is how to package the rentals. use the standard box that the discs come in, or a special box just for rental? (keeping the original box pristine makes resale easier, but represents a logistical challenge.) have the discs in the box on the shelves, or behind the checkout counter? (keeping the discs on the shelves makes checkout easier, but represents a security challenge.)

these cd library units are interesting, because you can string them together and connect 127 of them to one computer, which can then control them all. hook that up to a dvd rental checkout system, and you’ve got a nifty little behind-the-counter setup.

here’s one place that sells locking dvd cases.

here’s a place that sells various bits of store equipment.

research

some resources i’ve been combing through:

interesting reading.

something i could be doing with my life

opening a video rental place in downtown los angeles.

if only i had a clue as to where to even begin.