Gilbert says he rarely enters a video rental store anymore.

"I go to Blockbuster every once in a while, like if I'm in a hurry, or if I don't want to wait in the cold for this," he said, huddled around the redbox DVD vending machine outside a Walgreens store at Mohawk and Centennial boulevards. Gilbert showed his son how to choose a movie using the touch-screen. Then he swiped his credit card to rent the DVD for $1 a night.

Gilbert says he sometimes uses redbox, but he gets most of his movies through Netflix, a monthly subscription service. With Netflix, Gilbert receives DVDs through the mail, and he "streams" movies and TV shows, watching them instantly using his PlayStation gaming device.

The movie rental industry is highly competitive, with multiple rivals all vying for a piece of the $8.1 billion-a-year business, according to Adams Media Research, based in Monterey, Calif.

Traditional video stores, such as Blockbuster and Hollywood Video, still have the biggest slice of the market -- about $3.5 billion, said Tom Adams, president of the research firm.

But the shift in how consumers, such as Gilbert, are renting and watching movies is putting pressure on the longtime rental Goliaths -- Blockbuster, based in Dallas, and Hollywood Video, a unit of Movie Gallery, based in Wilsonville.

Both chains recently shuttered some outlets in the Eugene-Springfield area, and more closures could be on the way.

Blockbuster says it shut down 374 U.S. stores last year, and it plans to close as many as 545 more this year, leaving it with about 3,000 U.S. stores.

Movie Gallery, which filed for a reorganization bankruptcy in February -- the second time in less than three years -- said in February that it would immediately liquidate and close about 760 stores across the country, leaving it with 1,906 U.S. stores.

Consumers eventually will dispense with cumbersome discs and videos in favor of digitally streaming movies through whatever device they want to watch, according to industry analysts.

Early adopters already are doing that with TVs, gaming consoles, and even Apple iPhones, analysts say.

But until the technology advances and becomes the norm, which could take decades, consumers will continue to get their home entertainment through a variety of options, these analysts predict.

Adams forecasts that kiosks, or DVD vending machines, with '09 revenues nearing $1 billion, will be the biggest gainer in the next few years.

Kiosks "are growing by far the fastest in the three-to-four year window," he said. "Then in the four- to 10- year window, finally we'll see both Internet and paid TV start gaining some substantial share of the overall business."

"People -- even when it comes to rental -- seem to prefer a package rather than a (digital) file," Adams said.

$1 movies

Redbox, a concept created by McDonald's and now a unit of Coinstar, based in Bellevue, Wash., continues to catch on as more people discover the $1-a-night movie rentals at various retailers, including McDonald's, Albertsons, Fred Meyer and Walgreens.

The company has 22,400 kiosks in the United States and plans to install 7,000 to 8,000 more this year, spokeswoman Laura Dihel said.

The company set a record on New Year's Eve, renting more than 2 million DVDs in a single day, she said.

One drawback to the vending machines is limited selection. Each machine typically holds up to 200 titles -- a total of 630 DVDs. But new titles are added every Tuesday.

To expand its low-cost movie offerings to consumers, redbox is signing multiyear distribution deals with studios, such as Sony Pictures Home Entertainment, Lionsgate, and NCircle Entertainment, a leading distributor of children's entertainment.

Some studios are trying to force redbox to wait up to a month before it can stock their new releases. Redbox has responded by suing those studios, including Warner Home Video and 20th Century Fox.

Redbox, like other DVD providers, also faces the challenge of the long-term trend toward streaming.

"Redbox is a firm believer in the viability and profitability of DVDs for years to come," Dihel said. But the company also constantly tracks consumer demand for new technologies, she said.

"Our national network of locations, proven technology and expansive customer base leave us well-positioned to execute against developing technologies if and when data suggests customer preference is moving in that direction," Dihel said.

DVDs by mail

Netflix, a subscription service, also believes that DVDs will be around for a long time, spokesman Steve Swasey said. The company forecasts that it still will be shipping out DVDs in 2030, although fewer than today, he said.

Netflix is best known for its $8.99 a month mail subscription service whereby customers set up a list of movies they want to watch. Under that plan, they can have one movie out at a time, and when they return a disc, Netflix ships the next title on their list to them.

Under the same plan, customers may choose from thousands of titles to stream to their TV or other Netflix-enabled device.

The percentage of Netflix customers who are streaming is taking off, Swasey said. In late 2009, nearly half of Netflix's 12.3 million subscribers were watching instantly, up from 22 percent in 2008, he said. They're still watching DVDs too, Swasey added.

"Netflix is a three-act play," he said. "We're in Act 2: DVDs and streaming. Act 3 is all streaming, so Act 2 has a way to go."

Challenge for big chains

The volatile video rental industry has been through major upheavals before.

Locally, the first wave of video store closures struck several years ago, when the independent stores, Flicks & Pics and Premier Video, permanently shut their doors.

Business at Silver Screen Video, Eugene's sole remaining independent video rental store, has picked up slightly since then, manager Nichole Johnson said.

For Eugene residents who want to support a locally owned store, she said, "we're the only choice they have."

The store is open in the evenings (4 p.m. to 8 p.m. Sunday through Thursday, and 4 p.m. to 10 p.m. Friday and Saturday.) And it may expand its hours this summer, Johnson said.

Now a second wave is knocking out some of the chain stores.

Financially struggling Movie Gallery had sales of $546.3 million last year, down 28 percent from 2008, according to court documents.

Movie Gallery recently shut down its store in Veneta and closed the Hollywood Video outlet at Gateway Mall in Springfield, as well as two Hollywood Videos in Eugene: one on West Seventh Avenue, and another near the Santa Clara Fred Meyer store.

The company said it will continue to close underperforming stores and those with high lease payments.