Let me count the ways...

1) Their non-New Releases are overpriced. You shouldn't have to pay $3.99 to see Trading Places.

2) Their non-New Release selection blows monkey chunks. In the past month, I have held my nose and stepped into a Blockbuster (because it's the only video rental within reasonable driving distance) because I was in the mood for a particular movie. Get this: They didn't have Alien or Highlander. They had Highlander: Endgame, but I'd rather let a wolverine chew on my genitals than watch that.

3) Their late-fee system is, and has always been, stupid. They used to have a "3-day" rental which was, in reality, a 2-day rental, because they counted the day you rented it, even if it was 9pm. That's stupid.

Netflix is pretty good, from what I've seen, but the main downside is the wait. If you're in the mood to see Raising Arizona, you have to wait a couple of days for it to show up in the mail. Unless it's available via their "view on-line" system, but then you have to watch it on a computer, which most people don't like.

So if I were an entrepreneur, here's the kind of video store I'd set up:

It would have a website through which you could sign up for membership, with a search engine of available movies and whether or not they were in stock featured prominently on the front page. It would have a flat-fee, no late-fee pricing system like Netflix. You could order movies through the mail if you wanted, or pick them up at the in-store location. You could return them via the mail. The in-store location would be a small storefront with a few computer terminals for customers to browse the inventory. They would request them via the terminal, and the employee would go back to inventory, put the movie in a sleeve, scan it, and give it to the customer.

So it would basically be Netflix with a small storefront for people who wanted the immediacy of viewing. And they would have a decent inventory. I read somewhere that rental businesses make 90-95% of their profits off new releases, but I think there's a niche market for people who really love movies and want to actually watch ones older than 3 months. Also, being located in a college town, with many foreign students, I think stocking tons of Bollywood and Hong Kong films would set it apart.

In the meantime, here in Lafayette we're stuck with Blockbuster and a crappy little Hollywood Video. Sigh.