Thinking of Buying a Video Store Business in Australia? Here Are 3 Vital Questions to Ask

Australia’s video game, DVD, and recorded music retail industry is worth approximately $987 million in 2025, employing around 2,966 people across 572 enterprises.

Despite once being a household staple, the industry is in long-term decline due to the rise of streaming services and digital downloads. Over the past decade, revenue has contracted by an annualised 5.6%, and it is projected to fall by another 2.9% per year through 2031, reaching about $851 million.

The closure of Sanity’s nationwide stores in 2023 marked a structural shift, as physical retail gave way to niche independent operators focusing on collectibles, vinyl, and vintage media. Major retailers like JB Hi-Fi and EB Games have refocused on gaming hardware, digital products, and pop-culture merchandise to survive.

1. Is the Business Financially Viable in a Declining Market?

Why It Matters:

Video retail profitability has eroded as consumers move to on-demand and subscription models. A business’s ability to generate consistent cash flow now relies on specialising in collectible or nostalgia-based products.

What to Check:

• Profit margins and trends – The average profit margin is just 3.4%, compared to a 13.3% sector average, reflecting high operating costs and reduced foot traffic.

• Revenue sources – Diversify income through vinyl records, vintage media, and second-hand games, which are outperforming DVDs and CDs. Vinyl sales rose 14% in 2023 and remain the strongest segment.

• Inventory management – Ensure steady stock of high-value niche products like limited-edition vinyl and retro gaming consoles.

• Operating efficiency – Rent and labour costs must be minimised due to limited revenue growth opportunities. Small-format or hybrid online–in-store operations are often most sustainable.

2. How Competitive and Adaptable Is the Business’s Market Position?

Why It Matters:

Competition from streaming platforms like Netflix, Spotify, and PlayStation Store is intense, and most large-scale retail networks have exited. Success now depends on carving out a niche market and creating a strong community brand.

What to Check:

• Market concentration – Major players EB Games (27.9%) and JB Hi-Fi (21.5%) dominate, while independents survive through specialisation.

• Local customer base – Stores in New South Wales, Victoria, and Queensland benefit from dense populations and higher discretionary income.

• Product strategy – Vintage film, collectible merchandise, and pre-owned media attract repeat buyers and collectors. Retailers such as EB Games’ “Zing Pop Culture” range have successfully shifted toward memorabilia.

• Brand engagement – Building community loyalty through gaming events, vinyl listening nights, or local collaborations increases foot traffic and relevance.

3. Is the Business Aligned with Future Consumer and Technology Trends?

Why It Matters:

The future of physical media retailing hinges on embracing hybrid operations, community identity, and collector culture. Retailers who fail to evolve alongside digital consumption patterns risk obsolescence.

What to Check:

• Digital integration – Businesses that offer online ordering, social media marketing, and click-and-collect services remain competitive.

• Consumer demographics – Older Australians (aged 50+) drive physical media demand, especially vinyl, while younger audiences gravitate to streaming and gaming subscriptions.

• Niche resilience – Vinyl, vintage video games, and limited-edition merchandise continue to outperform digital-saturated segments.

• Regulatory compliance – Ensure copyright licensing for any rental or resale of physical media under the Copyright Act 1968.

Ready to Invest in a Thriving Video Store Business?

While mainstream DVD and CD retailing has declined, niche and collectible markets remain viable for entrepreneurs with creativity and community focus.

By combining in-store experiences, online visibility, and specialty stock, a modern video store can thrive as a cultural hub for collectors and nostalgia seekers.

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