Video stores still 'alive and well' in Indy

​This story was initially published on Dec. 30, 2015.

Visiting 10th Street and Emerson Avenue in Indianapolis is like stepping into a time machine where you can travel at least a decade into the past.

There, on a recent weeknight, customers streamed in and out of a Family Video store, rummaging through thousands of square feet of movie titles and dropping off DVDs to the return slip. Darrin Gray meandered around, gathering a half-dozen movies. Even with those plastic disc holders in his hand — the kind most people haven't picked up in years — Gray wasn't done browsing.

"I need my movies," said Gray, 38, who lives on the north side.

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The last one: There's only one Blockbuster store left in the entire world

Gray and a surprising number of customers like him are the reason you can still find a handful of video stores in Indianapolis. Although video rental giants Blockbuster and Hollywood Video have been gone for years, Chicago-based Family Video is still renting movies and games in 777 stores, mostly in the Midwest.

The U.S. video rental business has collapsed from more than 19,000 brick-and-mortar stores at its peak to 4,445, according to Rentrak Corp. Yet, Family Video has added stores in recent years, attracting customers who don't like the selection at Redbox or who don't want to commit to a digital subscription with Netflix.

"I did try Redbox, but I don't really like Redbox," Gray said. "I like the 50-cent movies. I like to look around."

Family Video, the only video rental chain left in Indianapolis, has eight stores in the city, five more in surrounding communities and about 80 total stores across the state. The chain is thriving in the Midwest, CEO Keith Hoogland said.

"If you ever go by our stores on a Friday night, at 6:30 or 7, you're going to see a lot of people in our stores," Hoogland said. "It's cranking. And it's fun."

Although some might laugh at the idea of going to a video store, Hoogland argues people never stopped loving the experience. Most just ran out of options. Hollywood Video shuttered thousands of stores, when parent company Movie Gallery filed for bankruptcy in 2010. Blockbuster sputtered for years and finally went out of business in 2013.

"What happened is people stopped thinking it's cool to go to brick-and-mortar video stores. But the reason they stopped is Blockbuster and Hollywood closed, and Movie Gallery, so there's this void on the East Coast," Hoogland said. "We were the third-largest chain and now we're the largest. If we were all over the country, I think people would still be going to brick-and-mortar stores and renting videos."

Contrary to the popular narrative that Netflix and Redbox crushed the largest video rental chains out of existence, Blockbuster and Hollywood Video made mistakes that led to their demise, said David Paiko, vice president of home entertaining for Rentrak. Those chains, for instance, often signed top-dollar leases in the 1990s and early 2000s.

"When business started to shrink, they were stuck with these big leases they couldn't afford," Paiko said. "There were Blockbuster stores, some of them even best performers, but Blockbuster had to close them because they couldn't renegotiate the lease to be favorable."

Family Video won't find itself in that situation, Hoogland said.

"We own all of our real estate, so all those buildings we're in, we own those," Hoogland said. "We're in the real estate business."

Family Video has a real estate arm called Legacy Pro. As Family Video stores have shrunk from 7,000 square feet to 5,000, the company has started leasing space to other retailers. Family Video has incorporated a tech repair business, called Digital Doc, into many of its stores. It also owns 125 Marco's Pizza locations, many of which are part of Family Video stores.

"We've also built some strip centers," Hoogland said. "If you go to our stores, you'll see (businesses) next to us."

But don't take Family Video's diversification as a sign that it considers the video rental business weak. Family Video stores have a loyal base of customers who consider brick-and-mortar stores to be the only places to grab movies and video games.

Family Video reaches many customers for reasons that aren't necessarily obvious. Dave and Tasha Martin, for instance, turned to Family Video even before the collapse of larger rental chains.

"I was a big fan of Blockbuster until you had to have a credit card," said Dave Martin, 37. He prefers paying for transactions in cash — something that isn't possible with Redbox's nearly 41,000 kiosks.

His wife, Tasha, 27, added that Netflix doesn't offer a selection she likes. "They mostly have older movies," she said, "everything you've already seen." .

Paiko of Rentrak said there are enough people like the Martins to keep Family Video viable for the foreseeable future. Rentrak, which measures everything from television ratings to online traffic, built its business in the 1980s by working with video stores to stock exactly the right quantity of titles — think of it as an early, primitive version of a Netflix algorithm. The company has seen every twist and turn in the movie rental business.

"You have Redbox, which obviously had a huge impact on the disc rental business when it came onto the marketplace and had big growth," Paiko said. "They're not really in a growth period anymore. They've maxed out their locations — in fact, they're paring down their locations.

"If you're in business now and you're a brick-and-mortar store, you're probably going to be in business for quite a while. Unless there's some quantum leap in the way movies get delivered, there's nothing on the landscape right now I can see that would cause the brick-and-mortar stores that are left to really be fearful."

The only major changes Hoogland sees Family Video making in the coming years are related to real estate.

"We need to get our video stores to the right size and get some partners next to us," he said, "which will help drive people into our parking lots, which will help people realize the video business is alive and well."

Call Star reporter James Briggs at 317-444-6307. Follow him on Twitter: @JamesEBriggs.