MARY LOUISE KELLY, host:

Movie night used to mean wandering the isles of your neighborhood video store. These days, with digital downloads, you never have to leave your coach. Changes in the way people watch movies has left video store chain Blockbuster struggling to stay relevant.

But as Sara McBride reports, the company is still showing signs of life.

SARA MCBRIDE: Blockbuster's almost a guilty pleasure for Laura Roberts. Take the copy of "2012" she rented recently from a Blockbuster on Sunset Boulevard in Los Angeles.

Ms. LAURA ROBERTS: See this is why I come to Blockbuster for things like this.

(Soundbite of laughter)

MCBRIDE: Roberts used to also get movies by mail from Blockbuster. Now she uses Netflix.

Ms. ROBERTS: Netflix has free streaming movies and Blockbuster doesn't, so we switched over to Netflix.

MCBRIDE: Roberts is exactly the sort of on-again, off-again customer that Blockbuster needs to see more often.

The company is struggling and the way people rent movies is changing. Lots of people stop at kiosks, like Redbox. Some people like Roberts, get movies online. In the future, most of us will.

Blockbuster's storefront model can seem old-fashioned. Here's the evil genius character from the TV show "Dollhouse."

(Soundbite of TV show, "Dollhouse")

(Soundbite of music)

Mr. FRAN KRANZ (Actor): (as Topher) I am obsolete. This must be what old people feel like, and Blockbuster.

MCBRIDE: But Blockbuster CEO Jim Keyes doesn't see it that way.

Mr. JIM KEYES (CEO, Blockbuster): We are the only multichannel provider with stores, with by mail. We also have Blockbuster Express vending machines. And we also have Blockbuster on Demand, our own digital solution, direct to your television or your mobile phone.

MCBRIDE: Compared with Netflix, Blockbuster has more new movies available for streaming. But for now, Keyes says, physical DVDs are the most important.

Mr. KEYES: Mainstream America is very slow to change. So we do expect that for at least five years, perhaps even 10, there will be a viable marketplace for DVD rental and retail.

Mr. DAVID BANK (Analyst, RBC Capital Markets): The studios very much need Blockbuster out there.

MCBRIDE: That's David Bank, an analyst at RBC Capital Markets. Movie studios like Blockbuster because they get a cut of each rental. With Netflix, terms aren't so generous.

MCBRIDE: Warner Brothers recently asked Netflix to hold back on renting its DVDs until theyve been out a month. In exchange, Netflix got the right to stream more Warner movies. Bank says that was smart.

Mr. BANK: Netflix is sacrificing a little bit of the present for the future. Blockbuster can't afford to play that game.

MCBRIDE: Blockbuster gets those same Warner DVDs right away, with no waiting period. This week, it's flaunting "Sherlock Holmes," which Netflix won't have for a month.

Instant gratification is a big plus for customers like Dom Ayeros and his fianc�e, Anne Capello. They ditched Netflix for Blockbuster a year ago because they were sick of waiting for the mailman.

Mr. DOM AYEROS: There's a lot of days when you are movieless with them.

MCBRIDE: Which is no good when you and your fianc�e like to catch five movies a week.

(Soundbite of laughter)

Mr. AYEROS: It's our together time...

Ms. ANNE CAPELLO: Yeah.

Mr. AYEROS: ...watching movies.

Ms. CAPELLO: We love comedies.

MCBRIDE: Now, they mix and match Blockbuster's by-mail service with in-store rentals. Their plan costs $16.99 a month. For that, they can watch all the movies they want, as long as they never have more than three out at one time. The Netflix three-DVD package costs the same. To keep prices that low, it'll take competition. So customers should hope both companies thrive.

For NPR News, I'm Sara McBride.

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