Beginner’s Guide on Starting a Video Rental Business in the United Kingdom
Video rentals have mostly been overtaken by online streaming platforms and video-on-demand (VOD) services. However, there is still a market for video rental businesses, and it only takes a great mind to create a marketing strategy that will bring back the demand for the sector. If you are up for the challenge, then starting a video rental business may be the venture that will suit you.
This article provides an overview of the video rental sector and information about registration, licenses, and permits. This beginner’s guide is provided to make planning and startup preparation more convenient for United Kingdom company incorporation. It also aims to provide professional support to you should you need it.
What is a Video Rental Business?
A video rental business is an enterprise that sells and rents out home videos like movies, TV shows, and other content to the public. Most of the time, video rentals provide terms and conditions or rental agreements for the use and borrowing time. Video rental businesses still survive now by providing a less costly alternative to cinema admission and streaming subscriptions. Many people also seek the video rental business for the rare films and content which are only available on CD, DVD, and VHS tape records.
Video rentals were in the hype from the 1980s to the early 2000s. Blockbusters and LoveFilm have been one of the biggest around the time, up until online streaming platforms rose and took over the industry. However, independent video rental businesses are still offering low-priced and wide choices of DVD titles that customers can buy outright. In 2010, it was recorded that around two-thirds of the market still rent physical media. And in 2014, many video rental businesses also moved online, where a third of their revenue comes from online sales for home delivery.
Even with the increasing demand for streaming video services, video rental businesses continue to serve the market the DVDs’ ease of use and popularity as gift items. Additionally, there are also aficionados, although few, who prefer physical formats over digital ones. And so video rental stores accommodate them by offering their services by post, keeping a physical store, and retailing online.
Moreover, the continuing popularity of video games gives rental stores the opportunity to ride on this trend. So, in addition to renting films, owners can also offer to rent out games. Although the business still has strong competition, the business can extend its channels from having a storefront to providing post-based services and home delivery.
How to Start a Video Rental Business
Research the Market
Finding customers for a video rental business is challenging. Therefore, to lessen the business risks, you should first assess the area if there is a market for your services. Make a realistic estimate of the demand for DVD rental in your locality. Is this type of business feasible, see if there are opportunities that you can take advantage of to market your business? For example, you may research which areas have bad or good connections. Then, evaluate whether you can use it as an edge to advertise a video rental business as an alternative for their streaming needs.
Know What to Sell
Once you think that there is enough demand to start the business, the next is to start planning. In this stage, it is important to decide not only the titles you want to offer but also the range and how many you need to stock. You can offer titles under categories like comedy, historical, musical, horror, sci-fi, romance, etc. You can also offer physical copies of new releases, second-hand ex-rental, video games, and even snacks and beverages. Special services like transferring VHS records to DVDs, stocking up on VHS titles that have never been released in other formats, and renting out VHS players.
Business Operations
Stock many new movies while it’s still hot on the market to make high revenue for their buzz. Give renters incentives to return the videos in less time, so it circulates fast and is not stagnant on only one customer. When its hype lows down, sell them as “previously viewed”, and later on in the bargain section. Putting up an online store or selling on popular platforms like eBay would also help you make revenues.
Project Income
Projecting your income will help you strategize better marketing and promotional campaigns for your business. Factors like demand for video categories, rental charges, and supply will affect your income. You can price new releases at £3 or more per night. After a few months, you can drop the prices lower and allow a longer rental period. To compute a projected income, estimate the stocks of new releases you will have, and the number of times they will be rented out throughout the year, then multiply them together with your rate.
How to Register a Video Rental Business in the United Kingdom
Many video rentals start as small enterprises, but you can always set up directly as a company to get the protection that corporations provide. In starting a rental business, you can choose either to set up as a sole proprietor, partnership, or limited company. Each business structure has its advantages and disadvantages. You should choose the structure that will best equip you given your capacity, plans, and goals.
Sole proprietorships and partnerships are practically similar, only that the latter has two or more registered owners. To set up as either, you need to register for self-assessment with the HMRC. What this means is that every year, you will furnish and report a tax return. A registering partnership needs to appoint a nominated partner who will be responsible for the business’s records and taxation.
Moreover, a limited company provides a separation between the owners and the company. This business structure provides its owners protection in case the business fails to pay its debts or goes bankrupt. The company registration in the United Kingdom is with the Companies House. The process entails company name registration and the submission of the director and shareholders’ personal information. The company also has to submit the Articles and Memorandum of Association as proof of the shareholder’s consent and to map out the company’s rules and regulations.
Registrants can complete the process themselves by going online, complying with the requirements, and paying a fee of £12. You may also register by post paying £40. Or you may also acquire registration services from a United Kingdom corporate service provider for more convenience and less hassle processing.
Licenses, Permits, and Other Legalities of Video Rental Businesses
Starting a video rental business in the United Kingdom does not require a license to operate. However, video rental businesses are subject to Video Recording Act regulations that restrict the enterprise from selling age-restricted titles to a certain age group. As such, the business needs to appropriately classify the titles according to the British Board of Film Classification (BBFC). Selling particular films to restricted age groups is a criminal offense.
Additionally, there is also a different classification applicable to games. The Pan European Game Information (PEGI) age rating system acts the same as BBFC. This system classifies games under 12, 16, and 18 PEGI-rated video games. To know more about the classification systems, you can go to the Video Standards Council Rating Board (VSC) website/
Moreover, in selling or renting out DVDs, you need to take note of the copyright licenses the product has. A copyright license could either be for rental or for retail. Make sure you do not rent out a DVD with a retail license as it would be against the law.
Since video rental businesses will most likely keep a record of those who rented their stocks, you have to register as a data user. The registration is with the Information Commissioner’s Office (ICO), and it allows the establishment to keep computerized records of their customer’s personal information. Additionally, you also have to acquire a Music Licence from PPL PRS Ltd if you will play background music during business hours. Other legalities you may need to look over include the following.
- Consumer rights
- Health, Safety & Fire
- Employment Regulations
Starting the Business with 3E Accounting Support
Starting a video rental business is not as easy as it seems. But with the right strategy, support and advice, you can kick off on the right footing and attract considerable customers. Acquire United Kingdom company incorporation services to register the business and to get corporate assistance from certified professionals. 3E Accounting United Kingdom can assure quick and full-compliance registration and other services with no hidden fees! Contact 3E Accounting today to get in touch with our agents and kickstart your business in no time.