Diane Mastrull: Couple's Career Plan B jobs become a blockbuster hit

Debbie Smith of Chester County discusses New Release DVD, a company she and her husband Troy opened.
Debbie Smith of Chester County discusses New Release DVD, a company she and her husband Troy opened. (CHARLES FOX / Staff)
Posted: January 29, 2013

As Debbie and Troy Smith revel in steadily increasing sales, a backlog of demand for their services, and the freedom of being their own bosses, the Chester County couple has earned the right to gloat.

Not that they are gloating. They're just relieved that in 2006, while both had good jobs, they developed and began implementing Career Plan B.

"We just saw the way the economy was going and were concerned about losing our jobs," Troy Smith said.

In his wife's case, those worries were justified. A senior chemist, she was laid off in April 2009 after 12 years with Sartomer, an Exton-based global supplier of specialty chemicals.

Her pivot was immediate, and she devoted herself full time to the aforementioned Plan B: their fledgling company, New Release DVD.

At the time, it consisted of six DVD-rental kiosks, all within a short drive of the Smiths' Glenmoore home. Debbie used a portion of her severance from Sartomer to buy five more for about $25,000 each.

Now, the company, consisting of the Smiths and two part-timers - two of their three children – operates 70 machines (with plans for more) in Pennsylvania, Maryland, and Delaware. The machines also dispense Blu-ray discs and video games.

Troy Smith, 45, quit his tool-and-dye job in September 2011 to tend to the machines, while his wife, who is 52 and president of the company, keeps the books and orders about 1,400 movies a month to keep the kiosks stocked with new releases. In 2012, revenue was close to $800,000 - up from $200,000 in 2011 - with profitability at about 30 percent, Debbie Smith said.

She rebuffed a lot of headhunters after she was laid off and is glad she did - even if she is working seven days a week these days.

In her last job, she said, she grew a business sector "from nothing to $20 million and got nothing out of it. I grow this into a $20 million business, and it's a whole new story."

For one thing, "he gets his new boat."

Entrepreneurial voyages all start somewhere, you see, and this one started on a boat.

A 31-foot fishing boat docked in Chesapeake Bay, to be precise. The Smiths were regulars in Maryland, where by 2006 DVD-vending pioneer Redbox had set up some of its first machines, mostly in restaurants owned by McDonald's, its parent company at the time.

"We rented one movie from them and thought it was a great idea," Troy Smith recalled.

Extensive research led the Smiths to DVDNow Kiosks Inc. in Vancouver, British Columbia. The company had just started producing DVD-rental machines for what its founder, Scott McInnes, considered a market with tremendous potential: independent DVD vendors that would serve independently owned venues such as small grocery stores.

Debbie Smith said she liked DVDNow's kiosks, in part, because of their open display.

Two vertical windows on the front enable customers to see the DVDs available, even while waiting in line, a design intended to reduce transaction time and improve customers' experience, McInnes said.

Unlike Redbox, which rents discs in clear trays, DVDNow's machines, which hold 280 discs, dispense movies in their original cases - giving machine owners the ability to sell movies as well as rent them. A monitor atop each machine shows movie trailers and can accommodate digital advertisements from local businesses, providing yet another revenue source.

McInnes said his company has 4,000 machines in operation. The Smiths are its largest East Coast client.

The couple tried a variety of venues for their first three machines: a grocery store, an apartment complex, and a convenience store. The grocery store's foot traffic quickly convinced them that was the way to go. With few exceptions, their machines are in independently owned grocery stores, in high-profile spaces such as the vestibules or near the checkout lanes.

Each store gets 10 percent of net DVD sales, Debbie Smith said.

"The biggest challenge in the last year was keeping up with the demand for machines," she said.

Much of that - requests from two to five grocery stores a month, she said - is the result of the recent departure of Blockbuster Express from grocery stores.

Since its inception, New Release DVD has been charging $1.49 per day for DVD rentals and $1.99 for Blu-ray. Those prices are higher than those at Redbox, which charges $1.20 for DVDs and $1.50 for Blu-ray.

The Smiths contend that the price difference is justified because they can make new releases available to customers a month or more faster than Redbox and Netflix. As independent operators, Debbie Smith said, they are not bound by movie-distribution contracts with major studios, as their corporate competitors are.

With Pennsylvania machines as far west as Pittsburgh and as far north as the New York border, the Smiths have made no decision on how many more they will add to the state. Only one thing has kept them from putting machines in Philadelphia, Debbie said: the traffic - and not the good customer kind - they would have to contend with to stock and service them.

Because of its inconsistent quality, the Smiths said they are not worried about an emerging alternative to DVDs, video streaming, cutting into demand for their movie discs anytime soon. At least not before Troy Smith's next plan kicks in.

"In a few years," he said, "I want to retire, go boating."

Diane Mastrull:

Debbie Smith of New Release DVD talks about her company, which operates vending machines for DVD and video game rentals. www.philly.com/business

Contact Diane Mastrull at 215-854-2466, dmastrull@phillynews.com, or @mastrud on Twitter.

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