When Eric Paul opened Video Experience in Cody in 1994, one of his rental competitors dropped by with an unfriendly message: set your rental rates the way I want or I’ll crush your business.

“I think I just kind of laughed at her and told her good luck,” Paul recalled, adding, “She ended up going out of business.”

Paul would go on to open Video Experience stores in Powell, Gillette and Billings; he’d outlast all his competitors in Cody and Powell. But on Saturday — with the closure of the Powell store — Video Experience went the way every other rental store in the area has.

“How do you compete with $7-a-month movies?” Paul asked rhetorically, referring to movie-by-mail and online streaming giant Netflix. “I kind of think that we’re at the beginning of the end for brick and mortar stores unless they come up with a completely new model.”

Victim of others’ success

The trouble started in the middle parts of 2008 as the recession started hitting Wyoming.

“That was the first year we had ever seen a decline in our revenues,” Paul says. “And then 2009 hit, and it hit hard.”

A full quarter of his rentals disappeared. That trend continued every year through the business’s demise.

“I knew it was coming, obviously. Once you saw Redbox take off and especially Netflix take off, that was pretty much the writing on the wall right there,” Paul said.

Between June 2008 and today, Netflix’s U.S. subscriber base has more than tripled: from 8.41 million customers to more than 29.17 million. That’s approaching one out of every eight adults.

In that same timeframe, Redbox kiosks popped up just about everywhere. Their ranks have swollen from 9,600 machines in 2008 to more than 43,700 today; Redbox rented out some 739.7 million DVDs, Blu-ray discs and video games last year — up roughly 385 percent from 2008.

Paul, meanwhile, suffered through 2009 and 2010. In 2011, he closed the Video Experience store in Gillette. Last April, he closed Cody’s.

Paul had thought the Powell store would survive another couple years. But for whatever the reason, business at the store here halved when the Cody store closed.

“The only theory I can really come up with is when Cody closed, people thought this was right behind,” Paul says.

When he did make the decision to shut down the Powell store, it was bringing in less than a quarter of what it once did. Revenue was back to where it had started — in 1995.

Powell’s Video Experience had lost three out of four customers in less than five years.

“At one point, I was easily in the five highest-trafficked stores in town. So for it to go the way it did as fast as it did... and I was in the middle of it and watching it, and I was caught off guard,” Paul said.

It’s a common story.

Paul once kept in touch with roughly 75 other independent video store owners around the country.

Today, he says, “I don’t know any of them I could pick up (and call) and not get a ‘disconnected’ on.”

Cody once had five video rental stores; Powell three.

The only surviving video rental store in the Big Horn Basin is The Movie Center in Worland (see related story).

The changing industry

Blair’s owner Brent Foulger got out of the video rental business roughly a decade ago, when the industry was changing from VHS to DVD.

“Video never was our thing,” he said. “It was a convenience item for the consumer when we had it, and we could see what was happening down the road.”

Foulger now leases space in front of his grocery store to house one of Powell’s two Redbox kiosks, but he suspects the machines will become a thing of the past, too.

“I foresee in the future, not that many years down the road, that Redbox will be done away with,” Foulger predicts. “It (video) will come on your phone or your iPad or whatever you got.”

He says it’s just a changing of the times in the industry. He doesn’t really miss it either, recalling the need to provide inventory and staff for the video rental section.

“To have people stand around for an hour and try and find a movie? No, I don’t miss that one bit,” Foulger laughed.

Tyler Schiltz is more nostalgic. He owned Lovell’s rental store, The Box Office, before being forced to close it in December.

“I miss being able to go into a building and actually have some customer service instead of stand outside when its 20 degrees or 20 below even and stare at the screen while three people are waiting in their cars behind you,” Schiltz says of the Redbox experience.

He also bemoans the loss of selection.

Netflix has a patchwork array of movies on its streaming service, while Redbox kiosks carry no more than 630 discs at a time. In comparison, Video Experience once carried roughly 16,000 movies in Powell and another 20,000 in Cody.

Perhaps the closest thing to a local video store now is the library system.

The Powell Branch Library has 2,265 movies on DVD or Blu-ray with another 3,261 in Cody and 1,359 more in Meeteetse. The titles are all available for check-out, free of cost, with a Park County library card.

A nearly unlimited number of titles are now instantly available online through services like Amazon.com’s pay-per-view streaming, but as Park County Library Director Frances Clymer notes, not everyone has high-speed Internet access.

Beyond the narrowing of convenient entertainment options, there are more serious economic impacts.

At Video Experience’s peak in Powell and Cody, Paul was employing 16 part and full-time workers; The Box Office in Lovell had three full-time employees.

Those jobs and payroll are now gone.

“The sad thing is, it was jobs for mostly college kids, and they have a really, really hard time finding jobs,” Paul said.

The end

Powell’s Video Experience had some of its historic bustle restored last week as customers hauled off movies at bargain-bin prices. A bagful of DVDs went for $10 — a little more than half the $19 Paul paid for each one. He was trying not to think about that, as his inventory dwindled to its last few thousand movies.

Paul says that after nearly 20 years in the business, he’s burned out. He’s seen only about three films this year, down from around three a week.

Paul knows losing a business is different than losing a loved one, but “it’s kind of like losing your best friend, emotionally,” he said.

When he founded Video Experience, Paul was 24 and had just gotten married. (“We didn’t get a honeymoon because I had to be at work,” he recalls.) Now, he’s a father and a city councilman going into an entirely new career field — as a realtor with Metzler and Moore Realty.

He even subscribes to Netflix’s online streaming service, though “it felt a little bit like putting on the wrong team’s jersey.”

Some loyal customers asked him what they could do when they heard the Powell store was closing.

“Short of people reversing their habits, you know?” Paul says. “It’s probably for the best, though, I guess.”

And then there was one

With the closure of Powell’s Video Experience, movie store fans are down to one lone outpost in the Big Horn Basin: The Movie Center in Worland.

Owner Sabrina Annand recently brainstormed some possibilities as to why her business is still around: perhaps Worland’s remoteness and its residents who don’t use credit cards. Perhaps most importantly, though, Annand runs The Movie Center in tandem with a consignment store.

“I don’t think you can just do movies anymore,” Annand said.

She only acquired the business in December and isn’t expecting to get rich, but she’s hoping it will turn out all right.

“It seems to be working out pretty good,” Annand said. “When the movies are down on sales, the junk store’s up on sales, so they seem to complement each other pretty well.”

Eric Paul tried a variety of things to hold on to his Video Experience customers. For one thing, he kept prices steady or lowered them from 2005 until the end.

“The problem is, once somebody’s paying $7.99 (a month) to Netflix, their psychology has changed to, ‘This is how we get our movies now,’” Paul said.

To compete with Netflix’s convenience, Paul even tried launching a service where staff would deliver or pick-up movies.

“That was a pretty dismal failure,” he said.

Paul considered, but ultimately decided against, getting into things like electronics (“there’s just no margin in it”) and tanning (“I just didn’t want to get into that”).

Tyler Schiltz, who co-owned The Box Office in Lovell from October 2007 through its December closure, did try selling tanning services and electronics alongside the movies rentals — plus candy, pizza and soda.

It wasn’t enough.

Schiltz said he lost roughly $20,000 over the business’ last two years.

He said the arrival of a Redbox kiosk at the Lovell Maverik in late 2010 was a major contributor to The Box Office’s decline.

“Without the foot traffic, we couldn’t sell things we were normally selling,” Schiltz said.

Other factors — including a hike in the minimum wage, taxes on tanning and thefts — didn’t help either, Schiltz said.

“Towards the end there we were losing between $1,000 and $1,500 a month trying to keep the lights on and employees paid,” Schiltz recounted. “So we said, ‘Well, we’ve got to stop the bleeding at some point.’”