MELISSA BLOCK, HOST:
The Blockbuster movie rental chain is breathing its last gasp. A few years ago the company closed thousands of stores, went into bankruptcy, then was bought by Dish Network. And now Dish says 300 remaining Blockbuster stores will be closed by early January. While the parent company is shutting down its stores, don't be surprised if you see the Blockbuster name if you happen to be in Alaska or Texas. They're Blockbuster franchises owned by Border Entertainment and those stores will stay open.
The president of Border Entertainment, Alan Payne, joins me from Austin to explain why. Mr. Payne, welcome to the program.
ALAN PAYNE: Hello. Glad to be here.
BLOCK: And along with stores there in Texas, you also have franchises in Alaska from Juneau to Kenai to North Pole. They have the Blockbuster sign I guess and they will stay open. So are brick and mortar movie rental stories still a viable business model for you?
PAYNE: Well, it's obviously viable or we wouldn't still be open. We're still profitable. The business is not what it was three or four years ago. It has declined but we've managed to make it work.
BLOCK: Well, how have you managed to do that because Dish says demand has clearly moved to digital distribution, people streaming movies and renting online. How do you do it?
PAYNE: We've just been totally focused on what the stores could do that our competition could not do. And that involves real low prices, large inventories that are tailored to the markets that we're in. And, you know, if you think about it, if you're sitting at home right now and you don't want to buy a movie, you want to rent one, the only place you can really do that is online. And a lot of people don't know how to do that. And the ones that do, it would cost them $3 or $4. So in our stores that movie rents for 49 cents a day.
BLOCK: Well, how will you keep getting movies if Blockbuster is gone?
PAYNE: Well, they've never supplied us movies and we've always bought movies through wholesale distribution. And in some cases for movies that are coming from studios that don't want to sell wholesale to us, and there are a couple, we actually go to retail stores and buy them.
BLOCK: You just go out and buy them and then rent them.
PAYNE: Yes, yes.
BLOCK: And that works? That's a model that works?
PAYNE: It sounds crazy but most mass merchants that sell movies sell them at cost. So we can go to Walmart, for example, and we'll pay about the same price to them that we would pay through a wholesale distributor.
BLOCK: Well, one thing I've read, Mr. Payne, is that at least in Alaska your business has helped because a bunch of people wouldn't have inexpensive Internet access. They wouldn't have the bandwidth to be able to easily stream movies. So they need to come to you to rent them.
PAYNE: Yeah, you know, one of our competitors obviously is online streaming. And that consumes a lot of bandwidth. So most of the Internet providers in Alaska, as I understand it, they charge more to heavy users.
BLOCK: Well, Mr. Payne, do you look forward and see an endpoint? I mean, do you assume that you can stay viable as a movie rental business indefinitely?
PAYNE: You know, the business is declining but it's slow. And I don't have my head in the sand. I know that we're challenged by all the technology. But I haven't given up on the opportunity that it might flatten out at some point, you know. So that's what we work toward but, you know, we have to be realistic and realize that it is declining.
BLOCK: Mm-hmm. You know, I wonder if managers of these stores are hearing from people who still like the notion that they can come in and maybe ask for advice about a movie or get something recommended by the person behind the counter.
PAYNE: Well, we have about 40,000 people through our stores every week through 26 stores. The stores are busy. Part of why people come obviously is for the community experience of seeing friends and seeing people, you know, our employees in the stores that obviously know movies. So that's part of why we're still here because a lot of people like that experience.
BLOCK: Well, Mr. Payne, thanks for talking to us. Best of luck.
PAYNE: Thank you.
BLOCK: That's Alan Payne, president of Border Entertainment which owns 26 Blockbuster franchises in Alaska and Texas that will stay open even after Blockbuster's parent company shutters hundreds more.