A long time ago, in a place not that far away, home video viewers did not have the opportunity to select their favorite films and TV shows from their TV set-top boxes or by digital download. Instead, they had to make the arduous trek to their local video store. Although this business model was highly popular in the '80s and '90s, the advent of the internet saw the slow decay of the retail video rental industry.

Movie Rentals: The Beginning When the first home video systems became widely available during the 1970s and early 1980s, movie fans clamored for the chance to watch their favorite films at home without relying on a broadcast or cable TV schedule. Movie studios also saw a way to bring back films from previous generations to a new audience. The growing demand and the new-found supply required an intermediary to facilitate the transaction -- a store that could bring the movies to the waiting customers.

Movie Rentals: The Boom Years During the 1980s and 1990s, retail video rental stores boomed. In 1995, the Blockbuster video rental chain had more than 4,500 stores. The company made $785 million in profits on $2.4 billion in revenues: a profit margin of over 30 percent. Much of this profit came from "late fees" on overdue rentals, which did not require any additional product sales and minimal additional labor, but became a major inconvenience for customers.

Movie Rentals: The Internet While Blockbuster and other retail video rental outlets were operating under their previous business models, a wave of technological innovation swept the world during the mid-1990s. Increased access to the World Wide Web created new retail opportunities. Companies such as Amazon and Netfilx filled the niche that video stores had just a few years earlier. Customers could now order their favorite movies online, receive them in the mail and send them back at their convenience.

Movie Rentals: The New Millenium The growth of broadband internet access in the early 2000s allowed media providers to transition from selling physical objects to offering digital formats. Films were now available for download directly to a computer without the need for bulky tapes or DVD boxes. Without the demand for physical inventory, the need for brick-and-mortar video stores waned. In 2007 the annual revenue for Netflix reached over $1.2 billion, but just three years later Blockbuster floundered on the verge of bankruptcy.

Movie Rentals: Today While millions of viewers enjoy the convenience of watching digital movies, some purists still savor the experience of physical media. Redbox, a rental kiosk provider, offers DVDs, Blu-ray discs and video games at many large retail outlets. Although the retail "big box" video rental store is all but extinct, movie fans will still seek out ways to rent and watch films. From TV and desktops to tablets and smartphones, movie buffs can now rent their favorite movies and watch them wherever and whenever they want.

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