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Sam Schreck
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Wednesday, March 01, 2006 - 03:07 pm, by:  Sam Schreck (Schreck300) Edit Post Delete Post Print Post   View Post/Check IP (Moderator/Admin Only) Move Post (Moderator/Admin Only)

Ok, I've been very close to buying a DVD/Video/Games rental shop for quite a while now. It's a 10 year old, solid earning little place at my local shops. The accountant and I have gone through the figures for the past 4 years and all looks healthy and consistent. It's 150 metres from my front door, so I've already saved $80 a week on fuel alone. It's a non franchise (member of the Network Video group) turning over approximately $220,000.00p/a with a running cost of around $150,000.00 (includes absolutely everything). The buy price is also very good, in my opinion. Tax ride-offs are obviously good and there's no competition in shopping centre. But, here's my main concern... Bigpond Movies. I've read pretty much everything on the site and am not convinced that the market will hurt video shops much at all. It's $3.95 per movie with a max download speed of about 25 minutes, on a super fast connection and up to 3 or 4 hours for slower connections. You can only download one movie at a time which you then obviously have to copy to disc (average of 50c per disc) to avoid choking up your pc with movie files. WIth the shop, it's $5.50 for new releases and you get 2 free weekly hires, $2.50 for recent releases and $1.00 for weeklies. You can hire up to 8 movies in one visit and don't have to sit around for hours waiting for them all to download. Not to mention, if your not a Bigpond customer, it chews up your download limits fairly heavily and your minimum cost for a decent connection these days is about $50 a month for a 512kps. Sure, prices will drop on broadband, probably the movie download costs too, after a while. And surley more movie download services will become available in the future. But will it take over the market? Would I be a madman to get into this industry? Any advise or opinions would be greatly appreciated.
Cheers.
Don Bagnall
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Wednesday, March 01, 2006 - 03:15 pm, by:  Don Bagnall (Baggs) Edit Post Delete Post Print Post   View Post/Check IP (Moderator/Admin Only) Move Post (Moderator/Admin Only)

Why are they selling the business Sam?
Sam Schreck
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Wednesday, March 01, 2006 - 03:19 pm, by:  Sam Schreck (Schreck300) Edit Post Delete Post Print Post   View Post/Check IP (Moderator/Admin Only) Move Post (Moderator/Admin Only)

10 years and they've had enough. The husband has another career that's extremely demanding and she only puts in about 25 hours a week at the shop. The rest of the time they have other staff running it. They've got 4 kids and don't really need the extra income any more. I've known them fairly well for about 9 years now and actually worked there casually about 7 years ago.
Don Bagnall
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Wednesday, March 01, 2006 - 03:42 pm, by:  Don Bagnall (Baggs) Edit Post Delete Post Print Post   View Post/Check IP (Moderator/Admin Only) Move Post (Moderator/Admin Only)

Oh, OK. That sounds like DAMN good reasons for selling

We've got a simmilar(ish) sorta deal for movie downloads over here, but it's never really taken off, for the same reasons you've stated.

I always go to our local vid/dvd/games shop.

And I'm currently on a 2Mbps download/128Kbs upload plan (Going to 3.5Mbps download/512Kbps upload shortly).

It sounds like a good thing, but I'm sure there will be more opinions
Peter Nitschke
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Wednesday, March 01, 2006 - 03:49 pm, by:  Peter Nitschke (Pen) Edit Post Delete Post Print Post   View Post/Check IP (Moderator/Admin Only) Move Post (Moderator/Admin Only)

I am no movie fan, but I would be wary of anything competing with an Internet alternative. Broadband is getting more common, prices and download limits are getting more favourable. 5 or 10 years, who knows how this will be affected?
Adam Lonergan
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Wednesday, March 01, 2006 - 03:58 pm, by:  Adam Lonergan (Alchemistal) Edit Post Delete Post Print Post   View Post/Check IP (Moderator/Admin Only) Move Post (Moderator/Admin Only)

Sam, I second Peter's views.
Also remember that service stations make their money not by selling fuel but by selling all the food and drinks, misc and especially cigarettes. That's why most places don't have the pay at the pump option. I'd look at the books closely and see what actually makes the money. I'd also look at the limitations the chain places on owners ie Could you do joint promotions with the local pizza store?
Thomas Mulraney
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Wednesday, March 01, 2006 - 03:58 pm, by:  Thomas Mulraney (Mxt_imports) Edit Post Delete Post Print Post   View Post/Check IP (Moderator/Admin Only) Move Post (Moderator/Admin Only)

Hey Sam, there was a really good article in last weekend's Australian Financial Review. Unfortunately I don't have a scanner but here are the main points in regards to Telstra's new service, etc:

- Key concern with Telstra's new service is that the movies can only be played on computers; "Telstra's video player software, which is based on Microsoft DRM technology, restricts users to playing the BigPond videos on PCs."
- There is a debate raging at the moment as to where the media should be aimed; on the computer or in the lounge on the TV which the vastly more popular and traditional setting. It is strongly argued that consumers will still prefer to be able to watch most rented/downloaded etc. media in the comfort of the living room on the big screen.

Thats good news for you Sam, however:

- A rival company, ReelTime is planning to launch a pay-per-view internet TV and movie service by July, which will work with a set top box attached to the TV.

Here's the website also to give you a bit of insight;
http://www.reeltimetv.net/

At this point in time it is very difficult to say, but generally with new technologies there are the early adopters who pick up on everything new straight away (this is generally a small figure), then the mass adoption in the middle (which could still be several years off whilst they iron out all the bugs) and then the late adopters.

However, by the same token, who can say if people will really go for it. I personally quite enjoy going down to the video store, I take my time picking through what I want, I ask staff for advice and if anything's wrong, I can actually talk to somebody. Plus by the same token I often lend movies I've rented to my girlfriend's bro so he can watch them too. I've d/l plenty of stuff from the internet and I can honestly say that I never enjoy watching movies on the computer screen.

Also Sam, is this going to serve as a primary income or secondary. It may be that you buy it now, hold on to it for five years or so and then onsell it again. Either way it is a slightly unstable time to buy because noone knows yet which way the consumer is going to go...

Hope that helps a bit at the end of the day you just have to weigh up the pros and cons and then go for whatever you think is right.

Cheers,
Tom
David Vaughan
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Wednesday, March 01, 2006 - 04:00 pm, by:  David Vaughan (Davidv) Edit Post Delete Post Print Post   View Post/Check IP (Moderator/Admin Only) Move Post (Moderator/Admin Only)

Factor in the risk of business decline and see if you are still making enough and if you have a comfortable exit assuming a reduced sale price. Are you relying on the business value remaining stable or rising?

Fast external hard disks are under $1/GB with a capital cost the same as a DVD player so I do not think storage of movies is a big deal, especially if they are being turned over on the disk (it is rental, not ownership). Bandwidth has yet to stop getting cheaper I see no reason for that trend to slow down. Think overnight downloads when you usually get your daytime cap again in current plans ("20+20"). These are early days for movies, but look what is happening with music. IMHO, be wary, but you are buying the business, not me.
Thomas Mulraney
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Wednesday, March 01, 2006 - 04:07 pm, by:  Thomas Mulraney (Mxt_imports) Edit Post Delete Post Print Post   View Post/Check IP (Moderator/Admin Only) Move Post (Moderator/Admin Only)

All good points David, Adam and Pen but by the same token big screen plasmas and the like are continually getting cheaper also. Its a common trend that we like big tvs with big surround sound systems, whereas the average computer monitor would probably be between 17" - 19", especially for people who aren't regular users.

Secondly what happens when you want to invite all your mates around to watch a movie or snuggle up with the missus, etc. Its just not the same on a computer screen. However, if ReelTime's plans do come to fruition than this may present more of a threat, again assuming that there will be a mass adoption by consumers which remains to be seen.

Either way Sam, whenever buying a business, there will always be risks involved. Like David said, factors these in and see if your still making money in the end.
Peter Nitschke
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Wednesday, March 01, 2006 - 04:12 pm, by:  Peter Nitschke (Pen) Edit Post Delete Post Print Post   View Post/Check IP (Moderator/Admin Only) Move Post (Moderator/Admin Only)

If you had a couple of honky female sales assistants, then business would probably grow :-)

Keep in mind too, that PigBond offers a to-your-door service that a lot of people might find convenient.

The main thing is, to acknowledge all the possible negatives, then you don't get nasty surprises. If it still looks good, then go for it! :-)
Adam Lonergan
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Wednesday, March 01, 2006 - 04:13 pm, by:  Adam Lonergan (Alchemistal) Edit Post Delete Post Print Post   View Post/Check IP (Moderator/Admin Only) Move Post (Moderator/Admin Only)

http://www.z500series.com/index.php

If these things were a little bit more stable there would be one in my lounge.
Peter Nitschke
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Wednesday, March 01, 2006 - 04:15 pm, by:  Peter Nitschke (Pen) Edit Post Delete Post Print Post   View Post/Check IP (Moderator/Admin Only) Move Post (Moderator/Admin Only)

It's easy enough to buy a video card with a TV out or S-Video adapter. Plug PC into TV, problem solved, (or in this case, potentially created). PC's as the media centre for the home is happening already.
Daniel Czechowski
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Wednesday, March 01, 2006 - 04:28 pm, by:  Daniel Czechowski (Dan) Edit Post Delete Post Print Post   View Post/Check IP (Moderator/Admin Only) Move Post (Moderator/Admin Only)

Let's compare the two. From my understanding, you can only play the bigpond movie once every 24hrs, then it gets wiped automatically. Firstly I wonder if anyone will figure out a way to 'copy' the movie file permanently, some genius geeks probably will (might just as well d/l an illegal copy and save yourself time, too easy these days).
Secondly, the fact that you can only play it once every 24 hrs is a big downside.
Thirdly, the price of $5.95 per movie is an absolute ripoff. Compare that to the movie deals you get at a neighbourhood video shop, where for around 13 bux you get 2 new releases (for a night or two mind you) and say 5 or 6 weeklies... (obviously the downside to the shop is the overnight rental for new releases) but honestly now, what stops you from copying the DVD image on your HDD or another DVD to play back later? I reckon value-for-money wise I would not go past a video shop. Mainly for the unreasonably high price, but also due to the restrictions... Sometimes I do watch a movie twice in 24 hours if it is a good movie.
Yep, you got a slightly difficult decision to make for sure Sam. I wouldn't be worried about Bigpond in the short term though. Who knows where it may be after 5 ot 10 years though. It might be a flop (like with the internet DVD hire services...)

On another hand, are you aware of the industry statistics, such as what the profit ratio is meant to be for such a business etc and how this one compares? From what you've written you seem confident about the price and the figures though, so I hope your accountant worked it out alright
Stephen Waters
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Wednesday, March 01, 2006 - 04:52 pm, by:  Stephen Waters (Chevo) Edit Post Delete Post Print Post   View Post/Check IP (Moderator/Admin Only) Move Post (Moderator/Admin Only)

Also I wonder how long it will be until Foxtel offers any movie you want on demand. Currently their Box Office ones are a bit pricey @ $5.95 and you can only have it for 24hrs but it's convenient, no fuss viewing. Coupled with the 'free' movie channels (and with the 2 free ones on Box Office each month) we haven't rented a movie for a couple of years now.
Sam Schreck
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Wednesday, March 01, 2006 - 05:02 pm, by:  Sam Schreck (Schreck300) Edit Post Delete Post Print Post   View Post/Check IP (Moderator/Admin Only) Move Post (Moderator/Admin Only)

Sony's CEO stated last week that they're about to release a tv with a computer hd inside that you can download movies to through your box. I believe they will be quite inexpensive. From what I understand, this service will be supplied by Foxtel and the likes, although I can't see that being available for under $150 odd per month.
Tim, it's in hawker where they're about to do another face lift and extend the IGA supermarket as well. Lots of foot traffic and very residential.
Thankyou everyone for your input so far. It's as I expected, lots of for's and against's for me to weigh up.
Shane Ilich
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Wednesday, March 01, 2006 - 05:25 pm, by:  Shane Ilich (Ferret) Edit Post Delete Post Print Post   View Post/Check IP (Moderator/Admin Only) Move Post (Moderator/Admin Only)

ok, sam, i'll give you my views. im 24, very computer/net savvy, and live with my folks. we have a broadband2 connection with a monthly 10gb peak + 10gb offpeak limit, and foxtel.

1. i download movies occasionally. HOWEVER, i mainly download new releases, cos i refuse to pay cinema prices for a new movie that i'm only half interested in seeing. (eg Capote).

2. i burn movies semi-regularly. in saying this, i am a regular at my local dvd store, and often take advantage of their bulk rental deals. i will watch movies, and if one grabs me, and i think it's likely that i'll want to watch it again sometime in the near future, i'll copy it. The only loss the dvd store incurs from this really is that in 6 months time i am unlikely to go and rent "point break" for the second time in a year.

the distinction between my downloaded movies and burnt movies is the quality. with downloaded movies, the quality is usually average, cos they've just been released....so i'll generally watch it, and delete it....then if im very interested in having it in my dvd collection, i'll hire it on dvd when it gets released and burn it.

I know that a lot of my friends engage in similar kinds of practices. to me, thus, the main loss is in DVD sales, NOT RENTALS. i could not tell you the last tim i bought a dvd.

3. my folks, when they do want to watch a movie, will send me to the local dvd store. they will watch Fox movies occasionally, but they're either not showing one my folks are interested/in the mood for at the time, or its start time is inconvenient. they have never taken advantage of the box office ordering a movie thing Fox offers.

in my mind, the "home-theatre" trend is really only just starting to become mainstream, and i dont think will ever die off. You are getting advice off a somewhat biased sample on these forums, in that we are all net-savvy enough to be using an internet forum. i dont believe that internet movie downloads will become too mainstream any time soon (5-10 years), and even if they do, the home theatre concept will still be there.

my advice to you would be this:
- go through the demographics of the stores members. are they in an age-group likely to be techno-savvy and take advantage of movie downloads?

- what is the demographic of the area the store is located in?? are you surrounded by students, who are likely to rent movies spur-of-the-moment, and/or middle-aged or retired couples who will rent movies for friday/saturday nights when there's nothing on, or young families with kids who rent kids dvds to keep them occupied? as you can see, i would imagine there are more demographics who are likely to utilise a dvd store than not.


Thomas Mulraney wrote on Wednesday, March 01, 2006 - 04:07 pm:

Secondly what happens when you want to invite all your mates around to watch a movie or snuggle up with the missus, etc. Its just not the same on a computer screen.




this is why i dont foresee dvd rentals, and the home theatre concept, dying down any time soon. The areas i do see things like movie downloads affecting is DVD sales, and cinema takings. To my mind, a dvd rental store is probably the best of both worlds, and is likely to be for the next 5-10 years at least.


Adam Lonergan wrote on Wednesday, March 01, 2006 - 03:58 pm:

Could you do joint promotions with the local pizza store?




this is a cracker-jack idea. i've often wondered why noone has done this before - link up with a nearby pizza store, do some sort of meal and movie combo. even better, do a pizza/dvd delivery service!
Ollie Ernst
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Wednesday, March 01, 2006 - 06:02 pm, by:  Ollie Ernst (Oli_g) Edit Post Delete Post Print Post   View Post/Check IP (Moderator/Admin Only) Move Post (Moderator/Admin Only)

One thing that I can't for the life of me work out why someone hasn't cottoned onto yet, is that there is a GOLDMINE in DVDs that are available overseas that haven't been released here yet, and may never be released here. Often very popular shows, in particular, TV shows.

I realise the region coding issue BUT, these days a good percentage of DVD players are region free and those that aren't can easily be made region free with a set series of commands via the remote. The commands for many DVD players are readily available on the net, and even sales people in department stores will provide them if they're savvy.

Also, as Shane says, he'll burn a rented DVD if he likes the show and is likely to watch it again, which brings me to my next point. DVD burning is rife, and many DVD burning packages will remove any region coding so even if you have a region coded DVD player and can't watch the original, burn it and watch the copy. I think the percentage of people who hire DVDs and burn them is high, particular on bulk packages like DVD Unlimited.

I know I personally have often seen shows available on Ebay US that I'd love to watch but can't be bothered buying and paying postage on. However if they were available to rent......

You'd just need to put the non region code 4 DVDs on a seperate shelf with a notice on it. The one thing which may be a stumbling block would be copyright as I don't know if you could buy the DVDs from overseas and rent them out without some form of licensing agreement.

Bottom line, it may be worth a punt as nobody else has tried it and may bring in new customers. Having said that, there may be a bloody good reason why it hasn't been done yet.

Either way, Sam, good luck with whatever you decide dude.

PS.......Any self respecting DVD/Video rental store should stock and sell blank DVDs too. It'd be a good earner.
Shane Ilich
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Wednesday, March 01, 2006 - 06:55 pm, by:  Shane Ilich (Ferret) Edit Post Delete Post Print Post   View Post/Check IP (Moderator/Admin Only) Move Post (Moderator/Admin Only)


Ollie Ernst wrote on Wednesday, March 01, 2006 - 06:02 pm:

PS.......Any self respecting DVD/Video rental store should stock and sell blank DVDs too. It'd be a good earner.




my ex-gf' used to work at a blockbuster that did exactly that...blatantly sold blanks dvds at the counter. number of times i used to walk in, put new releases on her account, and buy the corresponding number of blanks......
Sam Schreck
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Wednesday, March 01, 2006 - 06:56 pm, by:  Sam Schreck (Schreck300) Edit Post Delete Post Print Post   View Post/Check IP (Moderator/Admin Only) Move Post (Moderator/Admin Only)

Great and very helpful points folks.
I do plan on buying region 1 DVD's to rent out in bulk amounts.
Through my years at the zoo, I've made some great media contacts for advertising and single or joint promotions, which I plan on using as much as possible. There's a thriving pizza/take away shop next door (I get on very well with the owners, they own a soarer too) who I'm sure would be interested in bundle offers of some sort.

The age group in the area is mainly families with 5 to 15/16 year old children, from what
i've seen.

And with a rental shop, you don't need a credit card and don't have to be over 18 years as with Bigpond movies (though that's probably impossible to police). And unlike Fox, there's no bloody comercials.
Shane Ilich
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Wednesday, March 01, 2006 - 07:13 pm, by:  Shane Ilich (Ferret) Edit Post Delete Post Print Post   View Post/Check IP (Moderator/Admin Only) Move Post (Moderator/Admin Only)

do it sam!!

also, isnt porn legal in the ACT???........possible "virgin/untouched" rental market??
Ivor Miric
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Wednesday, March 01, 2006 - 07:18 pm, by:  Ivor Miric (Ivor) Edit Post Delete Post Print Post   View Post/Check IP (Moderator/Admin Only) Move Post (Moderator/Admin Only)

Sam in my opinion it would be a risk
(for the future), since i installed the cable connection, i havnt been to the rental shop for quite a while, i just download the the dvd rips and burn them, or all my friends do,
(good old bit-torrent)
anyways im 17 and i seem to be your target market. But with technology these days, for example foxtel box-office they offer similiar prices and you dont have to get off your ass.
Also Internet connections are getting quicker by the year, and so are computers. I dont now mate, to me its a risk.
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Wednesday, March 01, 2006 - 07:18 pm, by:  Ollie Ernst (Oli_g) Edit Post Delete Post Print Post   View Post/Check IP (Moderator/Admin Only) Move Post (Moderator/Admin Only)


Shane Ilich wrote on Wednesday, March 01, 2006 - 07:13 pm:

also, isnt porn legal in the ACT???........possible "virgin/untouched" rental market?




A LOOOOOONG way from being either virgin OR untouched in the ACT!!

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