For Rent: Cheaper Video Tapes Lots Of Stores Lower Prices, Offer Incentives To Draw Customers

David Lee has hit bottom.

Two video stores have opened within a mile of his own in Phoenix. Film fans are defecting to cable and satellite TV and live sporting events.

So here’s the deal at Video Plus: older titles, $2 a night; rent two or more and you can keep them for three days.

“This is as low as I can go without closing my doors,” Lee said.

In 18 years in the business, Lee, 65, has never seen competition this fierce. It has been a boon for bargain-hunting renters.

Video rental revenues fell 4.2 percent in 1997 and another 2.8 percent so far this year because of mild weather and a proliferation of entertainment options, according to the Video Software Dealers Association.

Steven Apple, vice president of corporate development for West Coast Video, a 600-store chain based in Langhorne, Pa., said customers have grown more sophisticated and demanding.

“If they find something they don’t like in a video store - no titles, a cramped store or surly customer service - they rather easily … go other places,” he said.

West Coast has responded by renovating stores, improving employee training and expanding its stock of tapes, Apple said.

It also has begun promoting deals, such as a week’s rental for the price of one night.

A-Z Video in Lancaster, Pa., offers the “Six-Pack”: six videos for six days for $6. In the past two months, Video Theater Movie Club in suburban Seattle has gone mostly to three-day rentals, with prices half-off on Wednesdays and Thursdays.

“The whole industry’s been down so we’re just trying to do something that will give us an advantage,” said store manager Sean Hardy.

Blockbuster Video, the nation’s largest chain, signaled in December that times had changed with its “Go Home Happy” campaign. Instead of charging roughly the same at all of its stores, the company’s outlets began competing locally on price.

Blockbuster “realized … (it) had become more of a chips-and-dip destination than an entertainment center,” said Richard Wolff, co-founder of TLA Video. “We never wanted to do that. We’re a little bit more serious about the film end of it.”

TLA, with five stores in Philadelphia and one in New York, has bucked the industry’s downward trend partly by stocking a wide selection of foreign and other hard-to-find films, Wolff said.

For most stores, however, the pie is shrinking. A decade ago, Lee said, customers averaged about three videos a week. Today, those who come in typically take just one.

Lee worries less about other video stores than about cable, satellite dishes and pro sports.

To compete, Apple said, West Coast is trying to become an entertainment destination in its own right. At one suburban store, West Coast brings in circus clowns, storytellers and magicians on Sundays to draw families.

“As we go into the next millennium, we’re going to have to be more entertaining inside our stores,” Apple said. “This stuff works.”