Jenny Soderholm looks for a DVD at Casa Video, which is fighting back by offering its own online services, with in-store pick-up and a rent-by-mail program.

James S. Wood / Arizona Daily Star

More Photos (2):

Other articles by Christie Smythe:

Christie Smythe: Former 'Ugly house' franchise settles suitTucson firm accused of 'deceptive tactics' in foreclosure rescuesLocal builder Pathway files for Chapter 7 bankruptcyTucson's Pathway Developments files for bankruptcy liquidationArizona mortgage failures fuel crisisShovels poised at South Side shopping centerReal Estate by Christie Smythe: Housing slide cuts antique door salesTucson office market in cooldownTucson's median home price plunges by 7.5 percentPhoenix-area lender to add Tucson firm

Construction
Komatsu Equipment Co
Mechanic General
CORT
WAREHOUSE/DRIVER General
CORT
Warehouse Supervisor Education
Assessment Technology, Inc
Social Studies Content Writer Health Care
Rio Salado College
PA's/Online Instructors

Big video rental companies used to be of little concern to the owners of Casa Video.

With its 40,000 titles, including a whole room of foreign and specialty films, Casa has always had an edge over the chains when it comes to selection, said co-owner Gala Schwab.

But that was before the popularity of Netflix.

In the past year or two, online competitors have been eating into the store's sales, Schwab said. Sales have slipped by 5 percent to 8 percent, in part due to online rental services, she said.

After years of struggling to compete against chains like Blockbuster, Hollywood Video and Movie Gallery, independent video stores throughout the country are finding it even more difficult to survive in the age of online video rentals.

Online rental services, such as Netflix, mail DVDs directly to consumers' homes and allow unlimited rentals for a flat rate. Blockbuster Total Access also allows users to bring DVDs back to stores and pick up new ones if they're too impatient for the mail.

Menlo Park Video, at 914 W. Congress St., saw sales plummet by about half within the past couple of years, said owner Mary Garcia. The small shop, which has just a few thousand titles, specializes in Spanish-language films and has a loyal but shrinking following.

"It sort of brings your morale down," said Garcia, who cut back on the store's hours and is thinking of retiring.

Other independents in Tucson have already closed.

Some, though, are beginning to fight back. About a week ago, Casa Video launched its own online rental services. Another local video-store owner is trying to help independents throughout the country compete with Netflix, Blockbuster and others.

Half independents

About 12,000 to 14,000 of the country's roughly 24,000 video rental locations are independents, according to the Encino, Calif.-based Entertainment Merchants Association, the leading trade group for the video sales and rental industry.

But although they make up at least half the video sellers, the market share for independents was only about 38 percent in 2004, according to the association. In 1997, independents had a market share of about 55 percent, the association says.

Online rental services are just one of many industry developments posing further threats to those stores, said Entertainment Merchants Association spokesman Sean Bersell.

New DVDs can sometimes be purchased for $12.99 or less, causing many consumers to opt to buy rather than rent, he said. DVD kiosks in grocery stores and other locations are also providing more options for consumers.

Online services, however, have made the most dramatic change in "the value equation" of movie renting, Bersell said.

"The heaviest renters, who are obviously the best customers for video stores, a lot of them have migrated to the online services," he said.

Ways to survive

But Bersell said independent rental stores can survive, even in the midst of the Netflix era. One way is to have "an incredible selection" or "really outstanding customer service," he said.

Independent rental stores can also "diversify" by pairing videos with other businesses, like a snack bar or even a tanning salon — a combination that has sprung up in the Northeast and Midwest, Bersell said.

"For some weird reason, it works out that a video store and a tanning salon makes sense," he said. The two businesses are busiest at different times during the day, he added.

Independents can also do more online, just like their competitors, said John Sarantakis, owner of People's Choice Video Express in Chicago and in Tucson at 225 W. Valencia Road.

Sarantakis said he has been helping other independent stores throughout the country start mail-order and other services through their Web sites.

Sarantakis said he tries to "inspire" other video store owners.

"I try to let them know, if you just sit there and do nothing, you're going to go out of business."

New at Casa Video

About a week ago, Casa Video, at 2905 E. Speedway, started offering its own online services, including an in-store pick-up program and a rent-by-mail program through an agreement with Florida-based Intelliflix, a Netflix competitor.

Mail-order rentals, which are offered in multi-DVD packages costing between $13.99 and $49.99, are not unlimited like other online services. There are also due dates and late fees, which are not typical of online plans.

Schwab said there hasn't been much interest in the by-mail plan yet. But the pick-up service, which allows customers to rent online and pick up movies in the store, has some takers.

One of Casa Video's occasional customers, 21-year-old University of Arizona student Jeff Fitzgerald, said he hasn't tried either of the store's online services, but might use the pick-up plan for something "I really want to see."

While looking through the store's Iranian section Thursday, he added that he likes going inside the store "just to browse."