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Broadband penetration rates in Blockbuster's last bastion

While much of America has abandoned physical media in favor of streaming options that let them Netflix and chill, there is still one town renting DVDs and Blu-ray discs the old-fashioned way.

Following the recent closure of two stores in Alaska, Bend, Ore., became the last city in the U.S. where a Blockbuster LLC store continues to operate. The store, which is privately owned, received national media attention, with the most common question being: How has the store managed to survive?

For the two stores in Alaska that closed this month, the reason for their longevity was a bit more obvious. One store was based in Anchorage, Alaska, a designated market area that according to MediaCensus data from Kagan, a media research group within S&P Global Market Intelligence, has a residential broadband penetration rate of 62.3%, well below the national average.

Kagan analysts Ian Olgeirson and Neil Barbour previously estimated that nationwide, the percentage of households with wireline broadband accounted for 77.4% of occupied units as of the end of the first quarter.

Also below the national average is Fairbanks, Alaska, the location of the second store that recently closed. That market had a residential broadband penetration rate of 63.8%.

The state of Alaska has for years been known for having unique climate and geographic conditions that make broadband deployment both difficult and expensive. In 2016, the U.S. Federal Communications Commission sought to address these issues by adopting a plan to encourage both fixed and mobile broadband service in high-cost areas across the state. Given the lower penetration rates and the higher costs of service, it makes sense that residents would continue to patronize their local Blockbuster stores to rent physical media.

Bend, though, does not have those same broadband penetration statistics. Instead, the market comes in above the national average, with an 89.1% penetration rate, according to Kagan's MediaCensus data. But Bend's Blockbuster has nevertheless somehow managed to survive.

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Store General Manager Sandi Harding told HLN (US) that she believes it is a reflection of the community. "Bend loves local," she said, noting that the store still has "DVD and Blu-ray customers that come in on a daily basis. And Friday and Saturday night, our parking lot is still pretty full."

Harding added that customers also enjoy the sense of nostalgia. "There's definitely people who want to come in and spend some time walking around the store and picking up some movies for their family," she said.

Tawna Fenske, a spokesperson for the Visit Bend economic development organization agreed with Harding's reasoning.

"One of the things that attracts people here, besides all of the outdoor adventures and activities, is the small, friendly, folksy feel. Bend has never lost that vibe," Fenske said in an interview, noting that people still smile and wave at each other on the street.

"So whether that supports the vibe, the nostalgia of a Blockbuster, I think there might be something to that," she said.

Fenske, though, also noted that Bend has a vibrant tech community and fast internet speeds. The largest internet provider in Bend is Telephone and Data Systems Inc., which acquired local cable operator BendBroadband in 2014. For the company's internet plans, speeds range from 50 Mbps to 600 Mbps, meaning that residents who want to stream movies rather than rent them certainly can.

"We're kind of that perfect blend of high tech and nostalgic low tech," Fenske said.

Looking forward, Harding told HLN that her store will remain open and renting discs as long as possible.

But Kagan analyst Wade Holden noted in an interview that physical media sales and rentals in general are expected to keep steadily declining.

"I'm sure there's some sense of nostalgia for people out there but … it's the 11th year in a row that spending on renting and buying discs has declined by over $1 billion," he said. "So it's hard to think it's going to do anything but continue to go away."

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