The home video rental marketing is changing fast. Announced today Blockbuster Video is expected to close 22% of their stores by the end of next year. That is almost 1,000 stores. Why? Because the Blockbuster Business Model is antiquated. People no longer want the hassle of going to the store, selecting a movie, then having to return the movie to the store later. Video rental by mail and online is really taking off! I shouldn’t just single out Blockbuster as Hollywood Video is in the same boat, trying to adapt to a changing marketplace.

But the real reason is Netfilx! Netflix is using a current model that allows people to select movies for very low prices and have them delivered right to their homes. When it’s time to return the movie just drop it in the prepaid return envelope and send it back. No late fees, no worries, and no driving back to the Video Store. But that’s only part of the reason.

Netflix is also a much more efficient operation because they do not maintain retail stores only warehouses. They do not need all the retail infrastructure and costs associated with operating stores. It doesn’t matter how many boxes of overpriced Milk Duds on display at BlockBuster Video… the model is dead.

Another factor in killing off Blockbuster is “Red Box”. You can pick up DVD Movie Rentals from Red Box now at your local Grocery Store, McDonalds, etc. The movie rental business is about convenience. People want movies now and they want them cheap and they want no hassle returns.

How long until BlockBuster gets buried completely? Who knows? Blockbuster has proven unable to compete with the Netflix Business Model!

What does the Future of Movie Rental Look Like for Netflix?

In the short term it looks good because Netflix is smart enough to leverage the next step in movie rentals… on demand movies. You can now watch many movies from NetFlix streamed directly to your computer.

I see a future where Netflix partners with the major studios to form a distribution model of streaming video. Netflix could be a real winner, but then again they could also be a loser if another technology company comes along to steal their thunder by creating a more effective and efficient high definition streaming video model.

Not everyone has a computer nor do they want to watch movies on their computer. But most of the new LCD TV’s include computer interfaces and in the not too distant future Televisions will have computer chips in them allows movies to be streamed directly to the Television bypassing the computer all together.

The future is all about on demand movies, cheaply streamed directly to TV sets. The Blockbuster Video Model is sadly outdated. The future is approaching fast!

The People have spoken the market has adjusted. What do you think? How do you rent movies? Is Nexflix the answer? Will online video rentals take over the sales of video games too? Netflix commands about 20% of the current market share… how high will they go?