Video stores getting crushed by Web

As a result of heightened online competition, the country's second largest video-rental chain seeks bankruptcy protection

Video stores appear to be heading the way of the car hop and drive-in theaters.

Movie Gallery, which operates under the names Movie Gallery, Hollywood Video, and Game Crazy, filed for bankruptcy on Tuesday, according to a story by Bloomberg. The collapse of the country's second-largest video-rental chain is staggering when one considers that only two years ago, Movie Gallery's stock was trading at $33.

On Tuesday, the stock closed trading at 22 cents, less than the cost of a movie rental.

Netflix and video-on-demand services being offered by cable companies have cut deeply into the traditional video-rental business. Video stores can't compete with the convenience of the Web.

Sure, I'll miss the strategically placed ice cream and Junior Mints at the store checkout, but I won't miss late fees, out-of-stock titles or the hassle of driving there in the first place.

But companies like Netflix shouldn't be too quick to take a victory lap.

Netflix users order films on the Web and then the company delivers DVDs through the mail. The service may beat the old brick-and-mortar guys, but I wouldn't think twice about dumping it the second someone offers a wide range of films at a good price and then delivers high quality images to me over my Internet connection.

 

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