It’s 5:30 p.m. on a Friday at Family Video in Urbandale, Iowa. Screams blare from TVs on the wall playing a horror flick. The store is crawling with people roaming through the aisle of the old-fashioned video store. Some search for a classic date-night DVD. Others hunt for that one last copy of Big Hero 6 for their kids. Deb Lange is looking for Gone Girl, a movie she’s had on her list for a while. This is her one opportunity after a long week of work to pick up some entertainment for the cold weekend she’ll spend inside with her family. “This place has any movie I could ever want,” she says.
In an age where movies are found just as easily on Netflix as they are in vending machines, Lange’s comment seems more suitable for an illegal download website. Because in 2015, stores like Family Video aren’t supposed to be here. When Blockbuster filed for bankruptcy in 2010, killed by digital upstarts like Netflix and low-cost kiosks like Redbox, many predicted the end of traditional brick-and-mortar rental stores. And over the last five years, the numbers seem to back those predictions up: Redbox now has about 35,000 kiosks; as of January 2015, Netflix has 57.4 million subscribers, with over 36 million of those subscribers in the U.S. alone; and Amazon Prime just announced it has over 20 million users.
But Family Video is a booming business. In fact, 2014 was the company’s most profitable year yet. Since being founded in 1978 by Charlie Hoogland, the Glenview, Illinois, based company has opened over 780 stores in the U.S. and Canada — 150 of those since 2010 alone. And there are plans to expand into states like Texas, Colorado, and South Dakota. Since Blockbuster finally closed its doors for good last year, Family Video is now the largest movie and game rental chain in the country.
A lot of that success can be chalked up to a series of smart business decisions. Unlike Blockbuster, Family Video owns all its stores. “They [Blockbuster] were paying outrageous pricing for leasing or renting their buildings,” says Aaron Boosinger, district manager of Family Video. . “Every movie in the store is ours. Every property we are located on is ours.”
The company has also diversified into other businesses. It owns an Internet, television, and phone services provider in Illinois, a chain of 24-hour gyms, and a commercial real estate division. They’ve opened “device clinics” in some of the Family Video stores where you can get the screen on your phone and tablet fixed. The company is even planning to get into the pizza business, partnering with Marco’s Pizza to put 250 to-go restaurants in its rental stores over the next three to four years.
“I definitely think people coming in where they can order their pizza, go grab a movie, then pick up their pizza works out perfectly,” Boosinger says.
But at its core, Family Video survives because people still come into the store to rent a movie, something they could just as easily do from their couch. District manager Tony Starr has a theory about that. He says that, although online streaming like Netflix seems convenient, it’s still not the most efficient way to watch a movie, thanks to the ever-irritating lost Internet connection and slug-like buffering. “That’s inconveniencing your experience,” Starr says. “People are still wanting the physical, packaged media. They’re wanting that disc that they can hold in their hand.”
What’s tangible has not lost its appeal, for now. “I applaud their efforts that they’re in the game,” says Vincent Moy, director of industry analysis for the market research company NPD Group. He doesn’t think the company will be in the game forever, though. New smart TVs connect directly to Netflix. Broadband speeds are increasing and diminishing those buffering issues. And if the last decade has proven anything, it’s new technology on the horizon may redefine the whole market. For Family Video to survive, Moy says the company has to offer movie fans more family friendly content — along with foreign and independent films. This way if people stop using Family Video for renting favorites like Guardians of the Galaxy and Gone Girl, the video store will have a small niche market to fall back on.
But there are downsides, too. Moy says if Family Video existed for a niche market, there’s still the possibility it would disappear in smaller towns that don’t have enough people interested in those specialty films. “The reason for Family Video to exist becomes smaller,” he says.
Family Video is well aware of this problem. It understands that, if not now, those looming online streaming numbers could hurt them in the long run, and so the growing need to continue evolving remains. “Will we reduce in, I don’t know 10, 15, 20 years? Probably,” Boosinger says. But he’s hopeful that people will still need customer service. “There’s always going to be that demand for going in and asking someone, ‘Is this a good movie?”
As Lange looks around Family Video for her Ben Affleck thriller, she pulls other movies like Lucy and The Giver off the shelves to bring home for her family to watch. They still stream movies at home and go to Redbox, but she likes renting a DVD for five days the best. “We just assume to rent from here because we can watch movies multiple times,” she says. Which is exactly what Family Video hopes Lange and others will continue to do for years to come.
