By JONATHAN CRIBBS
Aug. 5, 2005

ROANOKE, Va. — Standing behind his cash register, Larry Stultz is a little bit like the John Wayne Western characters he grew up idolizing — the aging underdog who stubbornly stood his ground, outgunned, out-resourced and out-financed in quarrels with the enemy.

You probably won't see any tumbleweeds bounce down Williamson Road past his little movie rental store, Videos 2 Go, and Stultz doesn't come to work in chaps and spurred boots. He does own a Remington shotgun and a Smith & Wesson pistol, however.

But each day, he said, he walks into his store — an old, renovated fast-food restaurant-turned-movie shop — knowing he's the underdog. The "big boys," as he likes to call them, could force him out at any time. Every day can be a struggle.

In the Roanoke Valley and nationwide, businesses such as Stultz's are part of a dying breed - independent, family-owned movie rental stores that have suffered at the hands of behemoths including Blockbuster and Movie Gallery, which recently purchased Hollywood Video, online services such as Netflix and a market of cheap and cheaper DVDs.

Many mom and pop stores that once dominated the local rental industry are adapting with revenue sources such as pornography, tanning booths, electronics sales and personalized customer service.

"Just being restricted to DVDs doesn't really provide a business with enough of a basis to survive in today's competitive market," said Andrew Mun, a spokesman for the Video Software Dealers Association, which represents more than 800 movie rental companies and 12,000 stores. "The video store is more than just a video store now."

Stultz relies on a range of little-man marketing ideas, from a pornography room to a beloved Western section to rock-bottom rental prices. He even started a seasonal business once, Videos 2 Go Snowplowing, much to the confusion of some customers.

"On this you live day by day, hoping that you get something," he said.

Steady survival

Suhad Rasoul's top store, Adventure World, off Stewartsville Road in Vinton, seems like a normal movie rental store until you walk inside. The strong odor of tanning lotion and assorted pastel-colored moisturizers mixes oddly with the macho, babes-and-brawn action movie posters taped to the windows. The left side of the store is reserved for several tanning booths, a popular stop before customers rent movies, she said.

"At first you look at it and go, 'That is a weird combination,'" said Rasoul, 22, who also works as a producer at WDBJ (Channel 7), Roanoke's CBS affiliate. "I thought I'd get a lot more questions than I do."

Although she wouldn't say how profitable Adventure World has been, she said business was good. When she opened the first store two years ago, she focused on finding a good location in a rural area far away from Blockbuster and other major stores. Since then, she's opened two more stores.

"I don't think a business like this would work in a bigger city where there's a lot more around," she said.

In Southwest Virginia, in addition to Rasoul's store, there are at least three other indie rental stores with tanning beds: Top Notch Movie and Tanning Center in Rocky Mount, Tanning Salon Super Max in Covington and Beyond Video and Tanning in Lexington. Owners for several of the stores said tanning and video rentals offset each other; tanners come in during the summer, movie renters come in the winter. It's a national trend too, said Mun, the video association spokesman.

"I really couldn't say why exactly. It really kind of amazes me," he said.

Darrel and Donna White own Movie Max in Covington. Unable to make enough at the store, Darrel does telephone work as a cable splicer. His store has a collection of about 10,000 movies.

"We survive, we make a living at it," he said. "I'd love to do better, but you know how that is."

Tanning salons have been one thing keeping mom and pop stores from going extinct in the Roanoke Valley. The 1988 local Yellow Pages listed almost 30 video rental stores in Roanoke, Salem, Vinton and Roanoke County. None of them was a Movie Gallery or Blockbuster, which was then a small chain still creeping out of the Southwest. In 2005, the total number of stores hasn't changed much, but Blockbuster, Movie Gallery and Movie Starz, a smaller, local chain, account for about one-third of the listings.

Nationally, the movie rental market has had ups and downs over the past two decades, peaking in 2001 at about $10.3 billion in spending, according to Adams Media Research, a Carmel, Calif., company. Today, the industry has shrunk by about 14 percent.

Since the 1980s, the number of stores that rent movies has stayed pretty much the same — about 32,000 — but the number of mom-and-pop stores has fallen by almost two-thirds, largely because of the influx of chain stores, grocery stores that rent movies, and retailers such as Wal-Mart that sell them cheaply, said Brendan Haley, an Adams analyst.

The success of independent stores tends to be scattered and unpredictable, industry experts said, but failure isn't predetermined either. Most local owners said they've resigned themselves to modest success.

"The smallest stores do less than $200,000 a year, spend less than a third of that on rental inventory and another third on rent itself, and you've got the rest for yourself, so it's possible to survive," said Adams President Tom Adams. "It's always been a business where the smart, resourceful local entrepreneur can be successful."

Ray McGee has been battling chains for several years as owner of Hi-Tech Video in Bedford.

Two chain stores have lured about $3,000 a month in business from Hi Tech since they opened two years ago - a third of his revenues, McGee said.

Armed with rock-bottom prices (he rents more than 10,000 videos for about a buck apiece) and friendly customer service, McGee said he expects a rebound.

He chuckles when he thinks of competition he's bested in the past. Several years ago, a store called Movie Time opened a 4,000-square-foot building nearby. It closed sometime thereafter, McGee said.

Although he said he isn't sure why Movie Time bit the dust, he expects the new Movie Gallery and Movie Starz to do the same. Since the chains have opened up he's lost customers but said many of them come back, tired of renting scratched DVDs that froze during play. Sometimes they come back complaining about the poor service.

"I'll shut them down before it's over with. I've done it before," he said. "I'll do it again."

McGee also sells an array of DVD players, Surround Sound systems, video game accessories and other types of equipment that help to patch revenue holes.

Then there's pornography, the indie store stalwart. Although the porn market's enormity has been hotly debated among research groups and trade and media outlets over the past several years, several industry experts said it's an important revenue source for mom-and-pop rental stores.

Finding reliable industry size estimates aren't easy either. Forbes magazine, after attacking the accuracy of reports in The New York Times Magazine and Adult Video News, estimated that up to $1.8 billion was spent on purchasing or renting adult videos in 2001.

Blockbuster refuses to carry the titles, so indie stores fill a niche.

"Pornography has been surging every year in whatever form, whether it's magazines, DVDs or anything," Video Business magazine editor in chief Scott Hettrick said. "It's been around since Caesar."

Pornography is one of the things that keeps Videos 2 Go open, Stultz said. Secluded behind his cash register is a creaky, wooden door, the gateway to his porn cache. Customers often dart into the room, perusing his collection of about 5,000 movies.

"It helps quite a bit because people can come here and get everything they want and don't have to go to two or three stores," he said.

Stultz said he made about $100,000 last year, and about 50 percent of that was through pornography rentals.

"I'd like to be able to get rid of it if I could," he said.

McGee said he's got a few pornographic titles at Hi-Tech Video but he doesn't tell customers about them and refuses to invest anything else into the genre.

"I'm a family store. If it got to be where I had to depend on that, I'd get out of the business," he said.

In at least one way, independent video stores can be cannibalistic. Stultz said he's often fed off the detritus of failing stores, purchasing their videos and DVDs during going-out-of-business sales. The copies come at cheap prices that help offset the high cost he says he pays to movie distributors because he can't buy in bulk, as Blockbuster and Movie Gallery do.

"It was really rough for the first few years until I got used to it," Stultz said. "Hey, this is what it's got to be for the little independent. No breaks for the little independent."

To the future

These days, the movie rental industry is going through rapid change: Videotapes are nearly obsolete, though many independents, including Stultz, continue to carry them. Online movie rental sites such as Netflix are growing at a rapid pace. So, can mom and pop shops keep up with that, and if so, how?

Adams said he doesn't see stores disappearing anytime soon, and although technological changes are indeed a daunting challenge to indies, he expects they'll avoid extinction. Meanwhile, Adams' research predicts movie rental sales will dwindle in about a decade, falling to about $7.9 billion in 2014.

"They have a 25-year history of a remarkable ability to adapt to challenging conditions," he said. "But long term, we see the business shrinking some more, really for competitive reasons. People are buying a lot more discs than they used to and that's causing them to rent less."

In the past eight years, the DVD sales market has grown from about about $6 billion to $16 billion, he said.

These days, the movie rental business is hard, Stultz said. His health isn't what it used to be. He suffers from diabetes, and he's already recovered from one heart attack in 2001. His doctor advised him to stay away from the store while he recovered.

Now, if he can, he said he wants to sell Videos 2 Go. The underdog needs a rest.

"I've made a living at it," he said. "It's been awful good to me, but it's awful stressful."

(This article was published in the Roanoke Times in Roanoke, Va.)