Not even close, says the The Network Group Managing Director Keran Wicks, who reports the company’s balance sheet remains strong as do its 300 Network Video store members around the country.
Wicks said The Network Group, Australia’s second largest DVD rental group, remains in a good position.
“I keep reading articles about how this business is dying but that’s not what I’m seeing on our balance sheet – and it’s not what I’m hearing when I talk to some of our 300 plus Network Video member stores.”
“The DVD rental business is a billion dollar business in this country and it’s not going to disappear tomorrow or next year or the year after that.”
Wicks said comments by VideoEzy and Blockbuster last week saying digital free-to-air TV will cost them 200 stores in the next five years is linked to their running an “outdated franchise model.”
“… is the kind of comment we’d expect to see from a business trying to deflect the real issue away from its outdated franchise model and turn it into an industry issue.”
According to Wicks, what makes the Network Group different to its competitors is that it’s a licensee, marketing and buying group – not a franchise.
“This puts the power back in the business owner’s hands by giving members the buying power and brand awareness of a big group without an onerous one-inch contract asking people to virtually give away their first-born.”
Over the past 18 months, Wicks said The Network Group has signed 60 new members to its network – mostly from other groups including the Franchise Entertainment Group (FEG), which owns VideoEzy and Blockbuster.
Despite this positivity, Wicks admits the business is feeling the impact of declining consumer confidence; Network stores range from a downturn of 2.5 percent to flat trading compared with the last couple of years.
“If you’re holding your own in today’s environment where everyone in retail is feeling the pinch, you’re actually doing well.”