JSE-listed Avusa reckons about 25% of all video stores in SA have shut up shop in the past 12 months. With an increasing number of South Africans going online to download content, and video-on-demand services being launched in the country in the past two years, the humble video store appears to be in trouble.
Chris Hugo, franchise manager for Johannesburg rental chain Video Spot, says his company has seen a “definite decline” in rentals, although “not as much as a quarter”. He attributes the company’s marginally better performance to the fact that it carries a wider range of titles than many mainstream rental stores.
“We’ve got a slightly different business model,” Hugo says. “We don’t just carry new releases; we’re more about unusual products and a historical catalogue.”
He says that although the wider catalogue brings customers to Video Spot’s stores, most of its rentals are nevertheless recent releases.
Video Spot has closed two of its stores in in the past 12 months — in the Johannesburg suburbs of Randpark Ridge and Emmarentia — and now has 12 outlets in the city.
Hugo says it’s not only downloads that are taking their toll on the rental business, but the weak economy as a whole.
“People are looking for cheaper entertainment options,” he says. “The economy is down and that’s making consumers more careful with their money.”
Avusa’s annual results, published on Thursday, support this notion. The media group says that during the period, it has had to contend with “weaker content, price deflation, format shifts and constrained consumer disposable income”.
The company says the performance of its subsidiary, Nu Metro Films, was “hampered by the downturn in the home entertainment market” and that “video-on-demand revenues have started rising”.
Pay-TV operator MultiChoice launched its Internet-based video-on-demand service, BoxOffice Online, in December. This followed the launch of the satellite-based version in July 2011. The service allows DStv users to rent movies directly, without the need to travel to a video shop.
Despite the decline in demand for rentals, Avusa says it has grown its market share of the DVD business and enjoyed growth in both revenue and units. Sales, it would appear, continue to do well; it’s rentals that face the biggest challenge, particularly as broadband prices fall and more of SA’s population gets online and becomes accustomed to using the Internet to find and consume video content. — (c) 2012 NewsCentral Media