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http://www.chicagotribune.com/entertainment/la-et-vhs-tapes22-2008dec22,0,6902095.story?track=rss

VHS era is winding down

The last big supplier of the tapes is ditching the format, ending the long
fade-out of a product that ushered in the home theater.
By Geoff Boucher
December 22, 2008

Pop culture is finally hitting the eject button on the VHS tape, the
once-ubiquitous home-video format that will finish this month as a creaky
ghost of Christmas past.

After three decades of steady if unspectacular service, the spinning wheels
of the home-entertainment stalwart are slowing to a halt at retail outlets.
On a crisp Friday morning in October, the final truckload of VHS tapes
rolled out of a Palm Harbor, Fla., warehouse run by Ryan J. Kugler, the last
major supplier of the tapes.

"It's dead, this is it, this is the last Christmas, without a doubt," said
Kugler, 34, a Burbank businessman. "I was the last one buying VHS and the
last one selling it, and I'm done. Anything left in warehouse we'll just
give away or throw away."

Dumped in a humid Florida landfill? It's an ignominious end for the
innovative product that redefined film-watching in America and spawned an
entire sector led by new household names like Blockbuster and West Coast
Video. Those chains gave up on VHS a few years ago but not Kugler, who
casually describes himself as "a bottom feeder" with a specialization in
"distressed inventory."

Kugler is president and co-owner of Distribution Video Audio Inc., a company
that pulls in annual revenue of $20 million with a proud nickel-and-dime
approach to fading and faded pop culture. Whether it's unwanted "Speed
Racer" ball caps, unsold Danielle Steel novels or unappreciated David
Hasselhoff albums, Kugler's company pays pennies and sells for dimes. If the
firm had a motto, it would be "Buy low, sell low."

"It's true, one man's trash is another man's gold," Kugler said. "But we are
not the graveyard. I'm like a heart surgeon -- we keep things alive longer.
Or maybe we're more like the convalescence home right before the graveyard."

The last major Hollywood movie to be released on VHS was "A History of
Violence" in 2006. By that point major retailers such as Best Buy and
Wal-Mart were already well on their way to evicting all the VHS tapes from
their shelves so the valuable real estate could go to the sleeker and
smaller DVDs and, in more recent seasons, the latest upstart, Blu-ray discs.
Kugler ended up buying back as much VHS inventory as he could from
retailers, distributors and studios; he then sold more than 4 million VHS
videotapes over the last two years.

Those tapes went to bargain-basement chains such as Dollar Tree, Dollar
General and Family Dollar, and Kugler's network of mom-and-pop clients and
regional outlets, such as the Gabriel Bros. Stores in West Virginia or the
Five Below chain in Pennsylvania. If you bought a Clint Eastwood movie at
the Flying J Truck Stop in Saginaw, Mich., or a "Care Bears" tape at one of
the H.E. Butts Grocery stores in Texas, Kugler's company probably put it
there. He also sells to public libraries, military bases and cruise ships,
although those clients now all pretty much want DVDs.

Kugler estimates that 2 million tapes are still sitting on shelves of his
clients' stores across the country, but they are the last analog soldiers in
the lost battle against the digital invasion. "I'm not sure a lot of people
are going to miss VHS," he said, "but it's been good to us."

If you rewind back to the 1980s, VHS represented a remarkable turning point
for the American consumer. For the first time, Hollywood's classics and its
recent hits could be rented and watched at home.

"It was a sea change," says Leonard Maltin, the film critic and author who
has written stacks of books to meet the consumer need for video
recommendations. "Hollywood thought it would hurt movie ticket sales, but it
didn't deter people from going to movies; in fact, it only increased their
appetite for entertainment. Hollywood also thought it would just be a rental
market, but then when someone had the idea of lowering the prices, the
people wanted to own movies. They wanted libraries at home, and suddenly VHS
was a huge part of our lives."

The format was easy to use (although fast-forwarding and rewinding to any
particular spot was the worst new-tech irritant since the telephone busy
signal) and, of course, the videocassette recorder and blank VHS tapes made
it possible to catch up on any missed must-see TV, whether it was "Days of
Our Lives" or "Monday Night Football." Hollywood found that movies also
enjoyed a second opening weekend, as viewers throughout the country made
Friday night trips to the rental store for new releases.

"I think in some ways it even pulled families together, if that doesn't
sound too corny, because renting movies became such a part of the weekend,"
says Jim Henderson, one of the owners of Amoeba Music, the
45,000-square-foot merchant in Hollywood that sells pop culture in just
about every format imaginable, including VHS. "It was also a great thing for
film fans. You could educate yourself and go back to the well again and
again. We're used to choice now, but that was the first time fans could
watch what they wanted when they wanted."

Amoeba no longer buys VHS from distributors such as Distribution Video
Audio. But customers bring in tapes every day to trade and sell. "We
actually sell maybe 200 a day, almost all of them between $1 to $3,"
Henderson said. "Almost the same amount comes in as goes out."

A lot of those are the classic or foreign films that are not available on
DVD, such as "The Magnificent Ambersons" or Gregory Nava's "El Norte," or
vintage music videos by punk bands or new wave pioneers such as Black Flag
or Siouxsie and the Banshees. Some older customers simply don't want to
switch to DVD, others just like the bargain-basement price of the tapes.

But, Henderson said, unlike with vinyl records, no one seems to cling to VHS
for romantic reasons.

"DVDs replaced VHS really fast compared to other format changes through the
years," Henderson said. "VHS took too long to rewind, they were boxy and
cumbersome, the picture was kind of flawed. The tape inside was delicate and
just didn't hold up. DVD just blew it away."

It's true, the VHS tape never really had a chance once the DVD arrived in
the late 1990s with all its shiny allure -- higher quality image, nimble
navigation and all that extra content. After a robust run at the center of
pop culture, VHS rentals were eclipsed by DVD in 2003. By the end of 2005,
DVD sales were more than $22 billion and VHS was slumping badly but still
viable enough to pull in $1.5 billion. Next year, that won't be the case.

Just before Halloween, JVC, the company that introduced the Video Home
System format in 1977 in the United States, announced that it would no
longer make stand-alone videocassette recorders. The electronic manufacturer
still produces hybrid VHS-DVD players, but it's not clear how long that will
last.

For a format that made Hollywood so much money, VHS leaves behind a shallow
footprint in the movies themselves. There was "The Ring," a 2002 horror
movie and its 2005 sequel, about a mysterious VHS tape that brings death to
whoever watches it, but that's a sad valentine. This year Jack Black and Mos
Def starred in "Be Kind Rewind," a loopy comedy that finds its center at a
VHS rental store that is holding out against the DVD era, but the rebellion
didn't go beyond the script -- the movie is available for rent or purchase
on DVD and Blu-ray, but it was never released on VHS.

The format was also name-checked in "The 40-Year-Old Virgin," the 2005 hit
film that stars an unloved salesman at an electronics store; and even he has
no room in his heart for the underdog format. "It's a dead technology," he
explains to a customer. "It's like buying an eight-track player."

Kugler is one of the rare people who can stir up some nostalgia for the
black, boxy tapes. His father bought Distribution Video Audio in 1988 and
carved out a niche as an inventory supplier for the video rental stores that
were popping up everywhere. His young son was interested in a different end
of the entertainment business; the younger Kugler spent many afternoons in
his teen years sneaking onto the Paramount Pictures studio lot and soaking
it all in. While watching the cast at work on "Planes, Trains and
Automobiles," he decided he wanted to become a filmmaker; soon, the kid who
was always underfoot on the "Cheers" set even coaxed Ted Danson to appear in
a two-minute film he made.

But life took Kugler on a less glamorous path. He started working at
Distribution Video Audio in 1991 and in short order took the company to new
heights by negotiating directly with studios to buy their overrun inventory.

The approach led the company beyond VHS, and soon Kugler's warehouses were
filling up with CDs, books and merchandise like "CSI: Crime Scene
Investigation" wristwatches and "America's Next Top Model" T-shirts.

A casual observer might wonder how much shelf life those sorts of products
could possibly have, but Kugler has moved hard to the Internet and says the
"scavenger culture" mentality and sites such as Half.com, Amazon Marketplace
and EBay have made it easier than ever to match narrow-niche and oddball
customers with the products they want -- especially when it's priced to go
at $2 or $3.

With some things, though, even Kugler the great salvager can't find a buyer
no matter how low he goes. He took a loss on 50,000 copies of "Yo-Yo Man," a
Smothers Brothers instructional video for the stringed toy. ("I'm not sure
what I was thinking on that one," Kugler said.) And then there is that stash
of VHS tapes that couldn't even earn a spot on the last shipment out of his
warehouse: a few thousand copies of "The Man With the Screaming Brain," a
2005 horror movie about a mad scientist, a Bulgarian tycoon, a cab driver
and some cranial misadventures. ("That one," Kugler said, "will be buried
with us.")

The majority of his firm's business today is with big box retailers
including Target, Wal-Mart, K-Mart and Sears, where the company sets up
displays of its discounted DVDs, such as "Superman Returns" and "Proof of
Life," which are often priced at $10 or less. Plenty of customers see that
price as an invitation to build up their DVD collections.

But Kugler, with a sly smile, offered a warning to consumers thinking of
putting up shelving to handle their burgeoning libraries.

"The DVD will be obsolete in three or four years, no doubt about it.
Everything will be Blu-ray," Kugler said, anticipating the next resident at
his pop culture retirement home. "The days of the DVD are numbered. And that
is good news for me."

geoff.boucher@xxxxxxxxxxx


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