How The End of VHS Took The Movie Rental Window With It

When DVD hit big, some studios desperately tried to hang on to the traditional rental window. It led to an odd format called DIVX...

This article comes from Den of Geek UK.

Driving my young son through a part of Birmingham over the weekend before last, we stopped at lights in the Cotteridge area. Just outside a big booze shop. “That,” I explained to my 13-year old, “was where I spent a good deal of my youth.”


For Cotteridge used to house a sizeable video shop, whose ex-rental VHS offers were almost as good as the range of new releases they always had to rent. Even just 20 years ago, it was the norm for the majority of us to spend two or three quid a time renting a tape, and having to remember to take it back in the morning. The day a popular frozen pizza brand introduced a ‘free rental at Blockbuster with every pizza’ promotion felt like a Venn diagram with me at the heart of it.

Ad – content continues below

Now? The video rental store is dead. And the idea of ‘renting’ a film, and having to return it to the store – by hand! – is positively archaic.

Yet for some time, the film industry was petrified about surrendering the comfort blanket of the rental window. It took the advent of DVD to change things around, but even then, many were fraught at the thought of rentals going. “I can’t believe that the heads of the major motion picture studios would be so stupid as to destroy the rental windows,” thundered Steven Jefferies, who owned the VidBiz chain of video shops in London, back at the end of the 90s. Quoted in Billboard, he said that “home video still accounts for 48% of all movie profits.” Not everyone agreed: Tower Records (remember them?) video manager Tara Gordon argued that a possible DVD rental window would be “suicidal when you are just launching a format.” Some still tried, mind.

But then DVD changed everything. By the time the format first started to gain traction with consumers in 1997, movie studios themselves were split as to which way to go – rent or straight to retail – yet alone the video stores themselves. Some, such as Warner Bros, were heavily committed to DVD, and to releasing all of their titles ‘day and date’ to sell through on the format. That is, they’d release films on DVD on the same day as the VHS version, at an affordable price.

Others were more cautious (Disney, for one, notably hedged its bets on DVD for a while, before eventually embracing the format). So cautious, in fact, that there was a DVD rival format, that’d keep the idea of a rental window in place.

That format was DIVX. Not the digital video codec – that’s DivX – rather an alternative, disc-based video rental system that was launching at the same time as DVD. The reason for its being? Because the VHS market was a known, reliable money-spinner for studios. They knew that, around six months after the cinema release of a film, they could release it on video to rent, charging video shops up to £90 for a tape. Then, a few months on, they could charge £10-13 for a version to buy, the key difference being generally fewer adverts (save for an infamous VHS release of RoboCop from Virgin Video, with half an hour of ads before the feature), and a smaller box. It all extended the financial life span of a film, and was a golden goose that many were wary of slaying.

DIVX, then, was the brainchild of an odd union of companies. Unlike DVD, that had support from hardware manufacturers (with film companies behind it too), DIVX came about as a partnership between the now-defunct American electrical retailer Circuit City, and an entertainment law firm by the name of Ziffren, Brittenham, Branca and Fischer.

Ad – content continues below

Yep, retail stores and lawyers came up with it.

The idea of DIVX was that a disc would cost around $4.50 in the US, against the $25-30 retail price of a DVD. Then, once you played it in your DIVX player – you needed one of those too, and not a standard DVD deck – you had 48 hours to watch it. Ironically, it’s the same kind of idea that sits behind digital video rental stores now, such as Sky Store and Google Play.

The disc would work, then, for 48 hours, and you could extend this for an extra fee to get another two days of use from it. If you wanted to keep the film, and remove the restriction, you could pay again to upgrade it to a DVD Silver. Retailers were also set to release DIVX Gold discs (basically, DVDs), but none ever appeared, nor did the DIVX format ever leave the US.

But it had significant initial studio support, which gives you an idea as to just how reluctant many were to leave rental windows behind.

For starters, an assortment of retailers backed DIVX, thinking this would maintain the idea of getting two payments for a home format release from consumers (this was before they hatched on the idea of multiple special edition releases of the same film on DVD). Disney, Paramount, Universal and Fox all released titles on DIVX, with around 300 films ultimately made available onto the format. Most were pan and scan releases, lacking a widescreen option, with barely any of the special features that DVDs were being stuffed with. DIVX was clearly being aimed at casual movie watchers, rather than film fans.

Yet film fans set alarm bells ringing. Loudly.

For fan resistance was vehement against DIVX, and this was an early example of an internet campaign against a planned format. The quality of DIVX releases was questioned, whilst there were fears that having more than one disc format would lead to consumer confusion. Furthermore, the DIVX system technically had the ability to feed back information as to what you were watching, and some questioned the Big Brother nature of that. That said, Netflix, Amazon et al do that by default now, and barely anyone bats an eyelid. Times have changed.

Ad – content continues below

One aside: in an attempt to counter the number of DVD fan sites that were slamming the DIVX format, out of the blue, a pro-DIVX website sprung up. Written in the style of a fan site, there were giveaways that more corporate hands may have been behind it. “Where the FACTS are told… and the decision is YOURS!” it opened with. “Enjoy those $4.49 movies!”, it added. The site would disappear after a year or so. The Wayback Machine has kept a version of it here.

DIVX ultimately failed in 1999, with the ability to view DIVX discs switched off in the summer of 2001. DVD had won the battle.

With DVD victorious, so the rental window system ended in the US pretty much on the spot. Stores still offered DVD rentals, but of discs you could buy at an affordable price. More and more people opted to simply buy a film outright on day one, especially as the advent of internet shopping had brought with it some hefty discounts on discs.

The studios, as it turned out, were ultimately thrilled. For they hadn’t banked on or really foreseen the notable increase in revenue that the DVD boom would bring, as people started buying more films than ever before – including versions of movies they already owned in another format – and paying more for the privilege too. The idea of owning a film that had been playing in cinemas just four months previously was an appealing one. Furthermore, studios couldn’t raid their back catalogues for releases fast enough.

In the UK, the move away from rentals was slightly slower, held back by one or two companies still keen to hold onto some form of window. But then there was a cultural difference. Whereas the American market had regularly seen big titles, even on VHS, go straight to sell-through, in Britain, it was a novelty. Warner Bros had pioneered it, skipping the rental window entirely on videos such as Batman Returns, Robin Hood: Prince Of Thieves, and JFK. Disney animated films did so too, and the studio gave a live action film a try too, sending Three Men And A Little Lady straight to buy, with a £12.99 price tag. These were very much the exceptions to the rule, though.

But the UK eventually caught on. “Last year, the UK video industry was driven by a movie about a doomed ocean liner and another about a bunch of stripping steel workers,” noted Billboard back in February 2000. “But this year, if it was on DVD, consumers bought it.”

Ad – content continues below

Perhaps the most notable quote in the article came from Iain Muspratt, the-then managing director of Choices Video stores. “When our stores are broken into,” he mourned, “it is the computer games and the DVDs that are stolen, not the VHS tapes.” Choices had been one of the chains that had called for the continuation of rentals.

It’s worth noting one further party interested in keeping the rental window open: cinemas. For cinemas – and the argument continues to this day – having as long a gap as possible between a theatrical release and allowing us to own a film in our own homes is a big objective. That, in theory, it’s likely to see more people buying cinema tickets. Fast forward nearly 20 years from the DVD rental argument, and some studios are pushing for a premium-priced home formats release within weeks of a cinema debut. That’s how much things have changed.

It is ironic that, in its own way, rental has made a comeback, albeit through on-demand services that let you instantly ‘rent’ a film for a two-day period. But the catalyst there too has been a format change. If video to DVD brought an end to traditional rental and a move to us buying more physical copies of films, the hard disk and broadband-driven era is taking things back a little the other way.

Whatever changes lie ahead, though, and more will inevitably happen, the idea of a physical rental shop is now a piece of history. It’s why, like the booze store of Cotteridge, many shops that used to feel like Aladdin’s caves for movie nerds have turned into Just Another Shop On The High Street. I’m sad that my 13-year old will never know such places as they once were. Although he will, in a few years time, have little trouble picking up a four-pack at a competitive price…