When the McDonald’s restaurant in Longview made renting movies as convenient as ordering a happy meal, Rick Hartley knew the show would soon be over for his video store.

Business at Hartley’s Alotta Music on Washington Way is down by about half this year, and his karaoke business is subsidizing the video store, he said. With McDonald’s offering $1 movie rentals at kiosks at three locations in Longview and Kelso, Hartley said he could see the writing on the wall.

“We just decided we better bail,” said Hartley, who will close the video store at the end of the month.

Once seen as the death knell for movie theaters, video-rental stores now are struggling to stay alive amidst stiff competition from online subscription services, such as Netflix, movies on demand from cable companies and video kiosks.

Alotta Music will be the third local video-rental store to go out of business this year. Two Ocean Beach Highway stores owned by the same company, The Movie Gallery, have closed. They were part of 950 stores nationwide the company shut down this year in an effort to better compete in the changing market, said company spokeswoman Meaghan Repko.

The Alabama-based Movie Gallery filed for chapter 11 bankruptcy last fall.

In 2007, 75 percent of all movie rentals came from traditional video stores, down from 82 percent the year before, said Jan Saxton, an entertainment industry analyst with the California-based Adams Media Research.

During that same time period, the market share for kiosk rentals more than doubled, and the number of Redbox locations nationwide is expected to triple to 30,000 by 2012, according to Saxton.

“The kiosks are growing dramatically,” she said.

The Redbox kiosks, which also appear in Wal-Mart and other retail stores, were launched in 2002 as a joint venture between McDonald’s and the Bellevue-based Coinstar, which operates coin-counting kiosks in supermarkets. The rapid growth of movie kiosks has spawned competitors, led by California-based The New Release Company expanding into supermarkets, including Fred Meyer in Longview, according to Saxton.

Each kiosk offers hundreds of new-release titles that are updated every Tuesday. The movies can be reserved online and rented and returned at any location, and customers have been drawn to the convenience, said Gary Lancina, vice president of marketing for Redbox.

The McDonald’s on 38th Avenue added the first kiosk in February, and it’s been popular with customers and boosted food sales, said Kerrie Kenoyer, the restaurant’s shift manager.

“Our sales have increased here in the past couple months,” she said.

Hartley, a retired Reynolds Metals Co. worker, said he’ll still run his karaoke business, but he’s out of the video-rental business for good after five years. At one point, he had a chance to sell the business for $25,000, but the prospective buyer couldn’t come up with the money, he said.

Rising gas prices have forced people to cut their car trips, and that’s made online rental services that send movies in the mail more attractive, Hartley said.

“Why go to a store and get one for $4.50 when you can sit at home and watch it for $4.50?” Hartley said.

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