Soon many other "mom and pop" stores appeared around the country. However, the studios became worried that these stores were making money off their products and not paying any royalties. Warner studios tried to bring the issue to court, but it did not go anywhere because of the doctrine of first sale. It is illegal to copy or publicly display copyrighted material, but renting did not fall into this category. After the first sale, one could rent a video to anyone who was not going to copy or show it in public and this is where the FBI Warning on the beginning of all videotapes comes from. Warner seeing this dilemma underwent a study to see how much money these video stores were actually making with their products. They found that blockbusters rented well for a few months after their release, while others lost money. (Lardner p.190) In fact, these small stores were not making that much revenue off the Hollywood products. Where the money in rentals came from was from children’s films and pornographic films. The film studios, however, still wanted to capitalize on their products.

Disney set up a system in 1980 where tapes were sold to the rental companies having a blue cover for a rental and a red cover for a sale. This system worked well because of the high demand for children’s movie rentals, and unlike adult films where one viewing is common, children tended to come back and rent a video over and over again. On September 2, 1981 Morton Fink, a Warner executive created the Home Video Rental Plan where Warner would allow stores to rent videos from them for the peaks of demand and return them when the videos were not renting any more. (Lardner p.193) The problem was that Warner created packages where the blockbusters would only be available by renting them from the studio. George Atkinson called for a boycott of Warner’s products and many of the other small video stores went along.

20th Century Fox seeing the disaster of the Warner plan devised their own. In it realtors could rent a video for six months ($75 for hits, $45 all others) and after which the video stores could buy the video for a small price. (Lardner p.195) This plan went over well, so Warner decided to modify their plan according to Fox’s, but still refused to sell the rent-only films while the other studio would sell any of their films including the blockbusters. The boycott continued as Warner tried to tone down its policy, but nothing worked. By 1982, all the rental plans from the major studios were eliminated. (Lardner p.202) The small business owners fought a battle with the large film corporations and surprisingly won. However as the VCR market increased, so did the video stores. No longer were they small companies, but they became large corporations. Smaller "mom and pop" video stores went out of business while companies like Blockbuster and Hollywood Video moved in. The increasing commercialism of merging large companies can be seen clearly when in 1987 the movie Tog Gun was released with a Pepsi ad proceeding the film on the videotape. Through the invention of the videotape, film has changed by having to adopt many of commercial rules once only applied to television.