Late this past July the St. Johns store of locally owned Videorama unveiled a plan to combat its main competitor, national home delivery and Internet rental giant Netflix.  As of late October, the St. Johns Videorama has more than 40 subscribers to their new monthly DVD rental plan that they’ve modeled after Netflix.

“The reason we decided to go into the subscription program is, we really felt like a lot of people were using Netflix, and Netflix does nothing for the local neighborhood,” says Videorama co-owner Terri Chadney. “For us to survive we felt like we needed to offer people options.”

Other competing national chains, like Blockbuster, also offer online on-demand video viewing and home delivery.  Oregon-based Hollywood Video’s online business model appears more focused on new release and used DVD sales.  However, Chadney sees her company’s major draw as being its homegrown roots and local focus.

Chadney joined her brother, co-owner Allan LeBeck, at The Video Chest in 1985, two years after he opened it with money borrowed from their father. They later changed the store name to Videorama and expanded from their first store in Kenton to the location in St. Johns, then to Northeast Alberta Street and the Pearl District.

“The Pearl [store] struggles. North Portland has always been our market, and I think when we veered out of North Portland it didn’t work as well for us,” Chadney admits. “I think people really like that we’ve always been a neighborhood  store. I mean, we live in the neighborhood,  it’s always been about North Portland, you know what I mean?”

Videorama has maintained its presence in the face of encroaching big-money adversaries Hollywood Video and Blockbuster since the late ’80s. Yet it took the movie-rental coup that Netflix has accomplished in the past 10 years to convince Chadney and LeBeck that a shift in structure might be needed.

As with Netflix, the Videorama plan automatically deducts a $15 monthly fee from its subscriber’s checking account in exchange for the ability to rent one movie at a time. The subscriber can swap out their rental as many times as they like without worry of a late fee, so long as the subscription fee is paid. For two movies at a time, the fee jumps to $25 and for three movies it’s $30.

Chadney reports a modest response to the program. From an estimated 2,000 store customers, only 40 have decided to invest in the monthly plan.

“We’re going to continue to keep it at St. Johns,” Chadney says. “Video subscription is a numbers game. So we’re fine with keeping it [in St. Johns], seeing how it works.”

Chris Whitley, a clerk at the St. Johns store, stresses that the 40 or so subscribers who do use the monthly plan tend to rent at a much higher frequency than pay-by-the-movie customers.

Netflix didn’t turn a profit until five years into renting its DVDs. The rental giant posted losses in the tens of millions from 1998 to 2002, and each year it was spending money to boost its subscriber count and brand name. Chadney and LeBeck don’t have the luxury of millions of dollars to blow, but their built-in customer base and proceeds from their adjacent fitness centers make offering an alternative possible.

“Netflix definitely has made an impact on every level,” Chadney says. “That’s the reality of life. We’re going to do everything we can to keep the video stores going and viable. I love going in and looking at movies, I love the tangibility of it, but it’s really in the end going to be up to the consumer.”