Industry History

A History of Home Video and Video Game Retailing

1975-1979

Fall 1975 – The Sony Betamax goes on sale in the U.S. The LV-1901 console, consisting of a SL-6200 video cassette recorder (VCR) and a 19" Sony Trinitron television set, retails for $2,495. A table-top recorder/player deck (the SL-7200) is marketed the following spring for $1,400. (Sony stopped offering the Betamax VCR as a consumer product in the U.S. in 1993 and ceased production of the device altogether in 2002.)

October 1977 – RCA begins selling the first VCR in the U.S. based on JVC's "vertical helical scan" (VHS) system. Manufactured by Matsushita and branded as "SelectaVision," the VBT200 retails for $1,000.

November 1977 – Magnetic Video, operating as Video Club of America, is the first company to provide theatrical motion pictures on home video. Company founder Andre Blay convinced Twentieth Century-Fox to license him 50 titles for sale directly to consumers. The cost of the license was $7.50 for each video sold, and Blay had to pay a $300,000 advance. Video Club of America marketed itself through a two-page ad in the November 26-December 2, 1977 edition of TV Guide (pages 48-49). The titles, which were available in both the Betamax and VHS formats, included Butch Cassidy And The Sundance Kid, Hello, Dolly!, M*A*S*H, Patton, The French Connection, The King And I, and The Sound Of Music. The videos are supposed to be for home use only, and not for rental. Membership in the club was $10.00 and the price of the videos was $49.95 each. Thirteen thousand people respond to the ad, and Blay recoups his initial investment in just two months.

December 1977 – George Atkinson launches the first video rental store, a 600-square foot storefront at 12011 Wilshire Boulevard in Los Angeles. Atkinson was the proprietor of Home Theater Systems, a company that rented Super 8 movies and projectors for parties. He bought one Betamax and one VHS copy of each of the Magnetic Video titles through a third-party for $3.00 over cost. Atkinson announced the availability of the Fox titles for rent in a one-column-inch ad in the December 7, 1977 Los Angeles Times. (Previously, he had advertised "Video for Rent" – although he didn't have any videos.) In order to raise capital, Atkinson charges $50 for an "annual membership," $100 for a "lifetime membership," which provides the opportunity to rent the videos for $10 a day. Atkinson is threatened with a lawsuit for renting the videos, but quickly discovers that U.S. copyright law gives him the right to rent and resell videos he owns. [There is a question whether Atkinson was actually the first person to open a video rental store. Some believe that Arthur Morowitz, who started renting videos from a storefront in New York's Times Square around the same time that Atkinson began renting videos, was the first.]

1978 – Midstates Appliances and Supply Co. in Illinois "got stuck" with a large quantity of videos. It decides to rent them and creates the Video Movie Club of Springfield. The club charged a $25 membership fee and rentals were $5 for three nights. Video Movie Club of Springfield eventually evolves into Family Video, which becomes one of the largest video rental chains in the nation.

1978 – Movies Unlimited, which claimed to be the first store specializing in video, opens its doors at 6736 Castor Avenue (Castor and Knorr) in northeast Philadelphia. The store offered videos for sale and for a $5 to $10 fee, customers could "preview" the video before deciding whether to purchase the title. The store would operate in the same location for 27 years, until June 12, 2005, when it closed its doors due to the building being sold.

1979 – 20th Century Fox buys out Andre Blay for $7.5 million. Blay remains president of Magnetic Video for three more years.

September 1979 – George Atkinson announces that, after growing into 42 affiliated stores in less than 20 months, he would change the name of his business from Video Cassette Rentals to The Video Station and would begin franchising stores.

November 1979 – Columbia Pictures enters the home video market, releasing 20 films.

December 1979 – Fotomat began a nationwide rollout of videocassette rentals at its 3,700 outlets. Consumers could chose from 131 titles, which they could order over the phone for pick-up the following day.

1980-1989

December 1980 – Walt Disney Productions announces that it would enter the home video market. It proposes the first "authorized rental" plan to retailers, under which a retailer could pay a flat fee for a cassette and have the right to rent it as many times as possible for 13 weeks. Sellthrough units could be purchased separately.

1980 – Pioneer introduces the laserdisc for the home video market.

January 1981 – Columbia Pictures attempts to impose two-tier pricing for video, with red videocassettes for rental and black for sale and retailer contracts obligating them to abide by the rental and sale restrictions.

November 1981 – The Video Software Dealers Association (VSDA) is formed as a trade association for video retailers. The major item on the new organization's agenda is preserving the right under U.S. copyright law of video stores to rent movies.

November 1981 – The Board of Directors of Magnetic Video Corp. removes Andre Blay as its president.

1981 – Tower Records begins testing video rentals.

March 1982 – Magnetic Video Corp. changes its name to 20th Century Fox Video.

Summer 1982 – Paramount Home Entertainment announces that Star Trek II: The Wrath of Khan would be priced at $39.95, the first major theatrical title to be priced for sale directly to consumers.

March 1982 – Legislation is introduced in the United States Senate to give copyright holders the exclusive right to authorize the rental of prerecorded videos, essentially allowing the motion picture studios to prevent video stores from renting movies.

October 21, 1983 – Video stores around the country close down for several hours on this Friday to draw attention to threats to the public's right to rent videos, including legislation before the Congress to exempt videos from the First Sale Doctrine.

1983 – George Atkinson resigns as president of The Video Station after it is revealed that the company had overstated its net worth by approximately $1 million the prior fiscal year.

1983 – VCRs are in less than 10% of U.S. TV households.

1983 – Babbage's, a retailer of computer and video game software opens in Dallas. Through a series of mergers and acquisitions, it will eventually become GameStop.

January 1984: The United States Supreme Court issues its groundbreaking decision in the Sony Corp. v. Universal City Studios, Inc. case, which affirms the rights of consumers to videotape television programs for "time-shifting" purposes. By ruling that Sony was not guilty of "contributory copyright infringement" for enabling consumers to record programs, the court legitimizes the VCR and set the stage for the widespread adoption of the device.

February 1984 – After being reintroduced in Congress in 1983, the legislation to give copyright holders the exclusive right to authorize the rental of prerecorded videos dies in the face of fierce objections from VSDA-member video retailers and their customers. The right of consumers to rent prerecorded videos from a video store is never seriously questioned again.

July 1984 – The Video Station has 500 stores.

1984 – The Sony Betamax hits its peak, with 2.3 million units manufactured worldwide.

June 1985 – The Cotton Club is the first video released with Macrovision anti-copying technology.

October 1985 – Former Texas oilman David P. Cook opens the first Blockbuster Videos store, in Dallas, Texas. (The "s" was later dropped from "Videos".)

October 18, 1985 – Nintendo releases the Nintendo Entertainment System, an 8-bit video game console, in the U.S. market. The company simultaneously released 18 titles, including Super Mario Bros. The innovative system and games reinvent the video game market, and Super Mario Bros., with more than 40 million units sold, becomes the best-selling video game of all time.

October 29, 1985 – "Pinocchio" is the first release in Disney's "animated classics" home video series. Initially priced for the rental market at $79.95, the title was subsequently repriced to $29.95. Backed by a then-record $7 million marketing campaign, "Pinocchio" sells 1.7 million units.

1985 – Movie Gallery is formed in Dothan, Alabama, and starts operating video stores in southern Alabama and the Florida panhandle.

1985 – Hastings Books & Music opens its first "triple combo" store in Amarillo, Texas, adding video rentals to its traditional merchandise.

1985 – 11 million VCRs are sold in the U.S., bringing its penetration to almost 30% of American TV households.

1985 – In the first year for which statistics are available, video rental spending totals $2.55 billion and the number of turns is 1.1 billion (a "turn" is the rental of one video). The average rental price is $2.38. Video sales revenue totaled $773 million.

1986 – Paramount Pictures, a mall-based retailer of movies and movie memorabilia, opens its first store. In 1988, Paramount would change its name to Suncoast Motion Picture Company.

1986 – For the first time, combined video rentals and sales eclipsed box office revenues for the year. Rental revenue in 1986 was $3.37 billion and sales revenue that year was $1.01 billion, for a total of $4.38 billion. Theatrical box office was $3.78 billion in 1986.

February 1987 – H. Wayne Huizenga, a Florida industrialist, acquires a 60% stake in the 19-store Blockbuster chain. 

April 1987 – Founder David Cook exits Blockbuster.

June 1987 – Blockbuster becomes increases its store count to 67 and becomes one of the top 10 video rental chains with its acquisition of the 28-store Movies To Go.

October 1988 – Mark Wattles opens the first Hollywood Video store, in Portland, Oregon. Hollywood Video would eventually become the number two chain in America, with 2006 stores in 47 states and the District of Columbia before being acquired by Movie Gallery in 2005.

November 5, 1988 – The Video Privacy Protection Act is signed into law. This federal law protects renters and purchasers of videos from having information about which videos they rented or purchased disclosed to third parties except in limited circumstances.

December 1988 – Blockbuster became the top video retailer in the U.S., with $200 million in revenue in 1988. It had more than 500 stores by the end of the year. Blockbuster replaced Erol's in the top spot.

1988 – Rentrak Corporation pioneers revenue sharing for video rentals. Rentrak acquires video cassettes from motion picture studios and other suppliers and then leases the cassettes to video rental stores for an upfront handling fee and a portion of the rental revenues, which are shared with the product suppliers. Revenue sharing lowers the cost of goods for rental stores, allowing them to bring in more copies to satisfy consumer demand.

1988 – For the first time, annual video rental revenues exceed theatrical box office receipts. Video rental spending was $5.15 billion in 1988 and box office was $4.46 billion.

1989 – Blockbuster expands outside the U.S. and passes the 1,000-store mark.

1990-1999

December 1, 1990 – The "Nintendo Exception" is incorporated into U.S. copyright law. The Nintendo Exception, 17 U.S.C. 109(b)(1)(B), permits console video games to be rented without the authorization of the copyright holder. 

January 1991 – Blockbuster acquires Erol's, the third-largest video retailer, giving it more than 1,500 stores.

August 1993 – Hollywood Video, which had 17 stores, goes public.

December 10, 1993 – Trans World Music opens its first F.Y.E. (For Your Entertainment) store in Trumbull, Connecticut. The F.Y.E. concept is a family-oriented, multimedia retail superstore designed to fit in a mall environment. [Trans World Music would later become Trans World Entertainment.]

1993 – Sony releases the last Betamax VCR (the SL-HF2000) to be offered in the U.S.

August 1994 – Movie Gallery completes an initial public offering, which gives it capital to develop and acquire additional stores, primarily in smaller towns and cities in the Southeast. From the beginning to 1994 to mid-1996, Movie Gallery would grow from 73 to more than 850 stores.

1994 – Blockbuster is acquired by Viacom.

March 3, 1995 – The Lion King is released on home video. It sells 32 million copies on VHS and DVD over the years, making it the best-selling video of all time.

July 1995 – Amazon.com goes online from the garage of founder Jeff Bezo. Initially, it limits its merchandise to books.

September 9, 1995 – Sony introduces the PlayStation video game console in the U.S. market. It will become the best-selling video game console in history.

December 1995 – Competing consortiums seeking to develop an optical disc format for motion pictures announce a compromise format, the digital versatile disc (DVD).

March 1997 – DVD is introduced in the U.S. The initial batch of titles includes Bonnie & Clyde, The Mask, and Twister. The DVD player soon becomes the most rapidly adopted consumer electronics product in history.

1998 – Direct revenue-sharing between motion picture studios and major video retailers is implemented, allowing participating video stores to increase their "copy depth" of titles.

April 1998 – Netflix launches the world's first online DVD rental service, offering more than 900 titles.

November 1998 – Amazon.com opens its virtual video store, with more than 60,000 theatrical and general-interest videos and more than 2,000 DVDs.

April 1999 – Titanic is the first motion picture DVD to ship one million units.

August 1999 – Blockbuster goes public.

December 1999 – Netflix introduces online DVD rental using a subscription model.

1999 – Amazon.com is ranked as the number one online retailer of video and DVD, a position that it retains to this day.

2000-Present

2000 – Movie Gallery reaches 1,000 stores.

2000 – Babbage's Etc. becomes GameStop, Inc.

2000 – Video sell-through revenue totals $8.6 billion, surpassing theatrical box office ($7.7 billion) for the first time.

October 2000 – Sony launches PlayStation 2, the first video game console to incorporate DVD playback capability.

November 2001 – Microsoft launches the second DVD-based video game console, Xbox.

February 2002 – MGM becomes the first major studio to permit its movies to be made available online on a pay-per-view basis, through CinemaNow and Intertainer. One of the first two titles offered is What's the Worst That Could Happen? On CinemaNow, the movies are available both as downloads and streams, prices range from $1.99 to $4.99, and the movies are available to viewing for 24 hours after purchase.

August 28, 2002 – Sony announces that by the end of the year it would cease manufacturing the Betamax, which had only been available in Japan since 1998. A total of 18 million units were manufactured worldwide during its 27-year span.

November 2002 –MovieLink launches its Internet video-on-demand service.

2002 – TNR Entertainment Corp. is formed and soon begins offering DVD rentals through self-service kiosks in supermarkets and other venues under the brand name "The New Release." 

February 2003 – Netflix surpasses 1 million subscribers.

March 16, 2003 – DVD rentals generated more revenue than VHS rentals during the preceding week, marking the first time that weekly DVD rental revenues exceeded VHS rental revenues. For the week ending March 16, 2003, U.S. DVD rentals generated $80 million in revenue, and VHS rentals yielded $78 million, according to VSDA VidTrac. The milestone occurred six years to the month after the launch of the DVD format in the U.S.

June 15, 2003 – For the first time ever, more DVDs were rented during the week than VHS videocassettes. According to VSDA VidTrac, 28.2 million DVDs were rented during the week ending June 15, 2003, while 27.3 million VHS cassettes were rented.

2003 – Wal-Mart/San's Club tops Blockbuster in U.S. video revenues, marking the first time that a sellthrough retailer was the market leader.

2003 – Movie Gallery expands to all 50 states and reaches 2,000 stores, making it the second-largest video specialty retailer in the U.S. in terms of store count.

2003 – Annual DVD rental revenue exceeds VHS rental revenue for the first time. Consumers spent $4.38 billion renting DVDs and $3.82 billion renting VHS cassettes during the year.

January 15, 2004 – CinemaNow becomes the first service to offer "electronic sell-through," motion pictures that can be downloaded for unlimited viewing on the computer to which they are downloaded.

May 2004 – McDonald's launches "Redbox" DVD rental kiosks, offering $1 per night rentals, at its restaurants in the Denver area.

August 2004 – Blockbuster launches its online DVD rental service, "Blockbuster Online."

2004 – Viacom divests itself of Blockbuster.

2004 – Annual DVD rental turns exceed VHS rental turns for the first time. DVD saw 1.75 billion rental turns, which VHS rental turns were 842 million.

2005 – Hollywood Video is acquired by Movie Gallery.

June 12, 2005 – Movies Unlimited, which claimed to be the first store specializing in video, closes after operating in the same location for 27 years. The owner decided to close when the building was sold. The business continued as a mail order enterprise.

June 2005 – McDonald's expands its redbox DVD kiosks to the Houston, Salt Lake City, Minnesota, and western Wisconsin markets.

October 10, 2005 – GameStop and EB Games merge, creating the world's largest video game specialty retailer.

January 25, 2006 – Redbox enters into an agreement with Stop & Shop and Giant Foods to install DVD rental kiosks in their supermarkets.

March 27, 2006 – Trans World Entertainment acquires Suncoast Motion Picture Co.

April 2006 – The Video Software Dealers Association merges with the Interactive Entertainment Merchants Association and the combined organization renames itself the Entertainment Merchants Association.

April 4, 2006 – MovieLink launches a "download to own" service for major theatrical motion pictures. The service allows consumers to view the movies as often as desired, and the movie can remain on the computer hard-drive indefinitely. Previously, MovieLink had offered major movies only for "rental": they expired 24 hours after viewing began or in 30 days. Brokeback Mountain is the first title available on the new service and is day and date with its DVD release.

April 18, 2006 – Toshiba begins selling the first high-definition DVD players in the U.S. and the first high-definition DVDs in the U.S. are released. The three HD DVD titles are The Last Samarai, The Phantom Of The Opera, and Serenity.

June 20, 2006 – The first Blu-Ray high-definition discs are issued. The titles are: 50 First Dates; The Fifth Element; Hitch; House of Flying Daggers; The Terminator; Underworld – Evolution; and XXX.

July 19, 2006 – CinemaNow launches the first "download to burn DVD" service for major theatrical motion pictures. The 101 titles initially available include About a Boy, Agent Cody Banks, Backdraft, Barbershop, Cry Freedom, High Plains Drifter, I Spy, In Good Company, Scent of a Woman, and a number of independent films and concert DVDs.

November 17, 2006 – Sony's PlayStation3, the first video game console to incorporate a built-in high-definition disc drive, is released in the U.S.

December 22, 2006 – Following a liquidation sale, Tower Records & Video ceases operations.

SOURCES: 

J. Lardener, Fast Forward: Hollywood, The Japanese, and the VCR Wars (1987); F. Wasser, Veni, Vidi, Video: The Hollywood Empire and the VCR (2001); Adams Media Research; Paul Kagan Associates, Inc.; Video Business; Video Store Magazine (now Home Media Magazine); Amazon.com; Blockbuster, Inc.; CinemaNow; Family Video; Hollywood Entertainment, Inc.; Movie Gallery; Netflix, Inc.; redbox; BetaInfoGuide.com; CEDMagic.com; "Selling home movies", Los Angeles Times, (July 5, 2005); Stewart, James B., DisneyWar (2005; p. 92).

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