Thinking of Buying a Movie Rental Shop Business in Australia? Here Are 3 Vital Questions to Ask
The Australian movie rental shop industry is in severe decline due to digital streaming services, on-demand movie rentals, and changing consumer habits.
In 2024, total industry revenue is projected to reach $36 million, with an annualised decline of 16.5% from 2019 to 2024.
Revenue is expected to fall further at an annualised 17.73% through 2026, driven by the increasing dominance of digital entertainment, piracy, and on-demand content delivery.
Despite shrinking market demand and heavy competition from streaming services, niche opportunities exist in specialty movie rentals, foreign-language films, and DVD/Blu-ray rental kiosks.
Buyers must assess financial performance, market positioning, and operational strategies to determine long-term viability in this declining industry.
1. Is the Business Financially Viable?
Why It Matters:
Profitability in the movie rental industry is heavily impacted by declining consumer demand, rising operational costs, and digital competition.
Industry-wide profit margins have shrunk to just 0.2%, with businesses generating revenue from DVD and Blu-ray rentals (57.8%), ex-rental sales (15%), video game rentals (2.5%), confectionery and merchandise sales (21.2%), and late fees (3.5%).
Successful operators focus on niche markets, retail diversification, and alternative revenue streams.
What to Check:
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Revenue sources: Does the business generate income beyond rentals, such as collectible movie sales, gaming lounges, or in-store events?
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Operating costs: How do rent, labour, and inventory expenses compare to industry benchmarks (purchases account for 40.5% of revenue)?
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Customer retention and foot traffic: Are there recurring customers, membership programs, or exclusive film collections to sustain engagement?
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Profitability trends: Is the business maintaining or mitigating losses in line with the 0.2% industry average?
2. Does the Market Position & Business Model Support Growth?
Why It Matters:
A movie rental shop’s success depends on its ability to adapt to digital disruption, niche demand, and hybrid retail concepts.
Businesses that diversify into collectibles, themed events, and experiential retailing are better positioned to survive.
What to Check:
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Target market fit: Does the business serve niche audiences, such as DVD collectors, classic film enthusiasts, or customers with limited internet access?
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Competitive landscape: How does the business differentiate from streaming services, digital rentals, and online movie retailers?
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Retail and experience integration: Are there complementary revenue streams, such as movie-themed cafes, in-store screenings, or retro gaming lounges?
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Scalability potential: Can the business expand through DVD kiosks, online rentals, or franchise partnerships?
3. Is the Business Aligned with Industry Trends & Future Growth?
Why It Matters:
The movie rental industry is evolving, with increasing demand for digital alternatives, niche film collections, and hybrid retail experiences.
Businesses that capitalise on nostalgia, physical media collectors, and alternative rental formats may find limited success in select markets.
What to Check:
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Hybrid rental and retail expansion: Does the business offer complementary products, such as movie memorabilia, gaming, or interactive experiences?
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Community engagement strategies: Are there opportunities to host movie nights, collector events, or subscription-based rental models?
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Compliance & regulatory alignment: Are film classifications, copyright regulations, and age-restricted sales policies properly adhered to?
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Revenue diversification opportunities: Can the business expand into digital rentals, subscription-based services, or exclusive film releases?
Ready to Invest in a Niche Movie Rental Shop Business?
With the movie rental industry in steep decline, traditional rental stores face significant challenges.
Success depends on financial sustainability, competitive differentiation, and alignment with emerging industry trends in niche film collections and hybrid retail concepts.
Prospective buyers should conduct thorough due diligence to ensure long-term viability and adaptability to changing consumer habits.
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