This video rental business says everything about America’s political divide
(This post originally appeared on The Washington Post)
A great story in this week’s Forbes magazine by Noah Kirsch pretty much sums up why supporters and opponents of Donald Trump just don’t understand each other.
It’s about a family-owned business called, not unreasonably, Family Video. The store rents videos and DVD’s. It has 759 locations across 19 states and Canada. Last year it grossed $450 million in revenues with a net profit margin of about 10 percent.
Wait, what? Videos and DVDs? “Who in the heck is still renting videos and DVDs??” asks all the intellectuals and academics living in the mostly urban areas and blue states on both coasts that supported Hillary Clinton in November.
Why, we do! says the rest of America who are located in the many red states from Illinois to Kansas that voted for Donald Trump.
Family Video is a not-so-small business that operates like a small business. Its 57-year-old owner, Keith Hoogland, runs the company with a simple business model. He owns the products that he rents instead of sharing revenues with bigger movie studios like the defunct Blockbuster used to do. Every store is company-owned so he’s not relinquishing managerial control to others. He’s also a do-it-yourself, making everything from the interior shelving to building his own proprietary point-of-sale system. And as a hedge on the future, he always buys the land where his stores are occupied, using rental revenues to pay off the mortgage (because a growing real estate portfolio has “no expiration date”).
Most importantly, he knows his customers. These are people in the heartland of America. Many of them voted for Donald Trump, I’m sure. Like the hipsters and millennials who meet at a Starbucks in New York and San Francisco to discuss equal rights and anti-discrimination, Hoogland’s customers also congregate in his stores. But they talk about other things: their families, the town gossip, the next church picnic. Oh, and good movies to watch. “If you walked in on a Friday or Saturday night, you’d be amazed at how busy our stores are,” Hoogland told Forbes. “People like the experience. It’s kind of like a local coffee shop.”
Hoogland knows that his customers have good reasons for doing what they do. They rent videos and DVDs because they have slower internet or just don’t like (or trust) online services like Netflix or Hulu, and they don’t want to be financially tied to the monthly subscriptions that come with them.
This is not some nostalgic, backwards choice. As the Forbes article points out, “copyright agreements on motion pictures are often less stringent for physical videos than for streamed content, meaning that rental stores frequently have access to new releases weeks, or even months, before Netflix or Hulu get them.” So some guy driving a truck in Fremont, Nebraska is able to watch the latest Woody Allen movie months before that professor in Berkeley can discuss it over cocktails? Classic!
Not so out of touch after all, hmmm?