The rickety sign in front advertises “Deni’s DVD rentals & Bakery”. While the bakery is still running, bakery staff members say it has been years since the adjoining DVD rental shop had been opened for business.

According to the owner of the supermarket next door, the DVD arm of the store closed in 2005.

Deni’s is a visible reminder that DVD rentals in Indonesia have for some years been on a downward spiral, largely thanks to the growing popularity of downloading movies from the Internet and the ubiquitous pirated DVDs for sale throughout the country.

Today in Jakarta there are an increasingly small number of stores where you can still rent movies, with only a handful of the big chain stores still operating.

Down the street from Deni’s in Benhil, Central Jakarta, is a Video Ezy franchise store that still has a few people occasionally wandering in and out to peruse the latest new releases.

Counter clerk Deny Kisuma said the store is never really busy but has a small number of steady customers.  

“We generally have 50 people coming into the store each day and we make around Rp 400,000 per day in sales,” Deny said.

“This Video Ezy store has a good trade and a lot of people come back every couple of days,” he said.

A family browse video cassettes at rental shop Video Ezy in Depok. JP/P.J. Leo

Video Ezy is one of the largest movie rental companies in Indonesia, with more than 110 stores across the country.

While Video Ezy and other bigger companies maintain relatively stable businesses, the conditions of falling sales mean smaller family-owned rental stores have a very uncertain future.  

Global trends show there are clear challenges to the DVD rental market and that the industry is in a deep malaise.

It’s not just pirated DVDs that are detracting from business, but more broadly there’s a change in viewing habits as more people are downloading movies or using the Internet to order discs through sites like Netflix, an online movie service that delivers to your home.

Netflix, Apple, Amazon and other websites have all eaten into the video rental market by offering easy and convenient online movie rentals.

In September last year the largest American video rental company Blockbuster Inc. filed for bankruptcy, highlighting the impact of online sales.

Investment banking and market analysis firm JP Morgan has forecast a bleak outlook for the future of DVD rental stores, declaring that movie downloads and online rentals will diminish their trade.

In their August 2010 report, JP Morgan wrote that this year would be the peak year for rental stores’ sales and from 2012 onwards it would be a downward slope.

“We believe adoption of online video streaming and downloading services will accelerate dramatically in 2011 … and be promoted by major retailers,” the August 2010 report said.  

“DVD kiosk revenue opportunity [as a result] will peak in 2011, owing to loss of share of the home entertainment market to the online video services,” the report said.

In Indonesia rental stores face a duel challenge.

There is not only the growth of online movie services to contend with, but also the abundance of cheap and easily available counterfeit movies taking business away from rental stores.

Markets and shopping centers across Jakarta are full of stalls that stock pirated DVDs which sell for around Rp 5,000 each.

In comparison, rental stores charge an average Rp 3,000 to borrow a film overnight, or Rp 3,500 for a week.

While police special crimes units often seize huge quantities of illegal pirated discs, the production of pirated DVDs in Indonesia is too widespread to fully contain.

Deny Kisuma from Video Ezy said the amount of pirated DVDs or their cheap prices doesn’t matter, it’s the difference in quality that draws people to certified rental stores.

“You know when you rent a disc here it is not grainy and it has a good quality picture, that’s why some people always come back and don’t bother with the fake discs. But I also know a lot of people that do buy the fake copy DVDs, so I don’t think those people are renting many movies,” he added.

Within the gloomy outlook for the future of rental stores, a handful of stores in Jakarta have managed to improve sales by creating a niche market that focuses on customer experience.

One of these stores is Subtitles at Dharmawangsa Square in South Jakarta, which describes itself as a social venue where you can rent and watch films with your friends.

“Subtitles is different from most rental stores because we have private rooms for customers — mini cinema rooms,” Subtitles staff member Beiham Damara said.

“On weekends we always have full bookings and it has become quite popular with people telling their friends about it. We have a lot of indie movies that people can’t get anywhere else and we also take requests so people can always watch the film they would like to see,” he said.

Subtitles opened in 2004 and was the first rental store in the city to provide private viewing rooms.  

Today there are a number of similar stores that have popped up in Jakarta also offering private viewing rooms to give customers a more fun and memorable experience renting DVDs.

Beiham Damara hopes that the novelty of being able to watch films inside the rental store will keep customers coming back and defy the trends of the declining rental industry.

“I don’t know what will happen in the future with more competition from other stores and from Internet downloads and pirated discs, but I think Subtitles will always be a comfort for movie viewers to watch with their friends and family,” Damara said.

It seems the future of DVD rental stores might depend more on the experience than the practicality.

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