Don't bury the traditional video rental specialists yet.

Something started earlier this year when an unloved Hollywood Entertainment (NASDAQ:HLYW) found a buyer in an insider-led group. They should know what the company is worth if they are willing to put up their own money to buy it at a premium.

Then, last month, Movie Gallery (NASDAQ:MOVI) put up improved quarterly earnings and raised its revenue outlook for the year. Last week, it completed a share buyback -- and initiated a new repurchase plan.

Does it impress you when two of the industry's leading players are eating their own cooking? It should.

Top-dog Blockbuster (NYSE:BBI) may not be in a mood to gnaw on its own paw, but it's certainly been active. It acquired a small video game retailer last month and just yesterday revealed that it had licked a class action lawsuit. Management is looking for a 10% dip in earnings this year, but there is reason to get excited about how the end of the year will shape up once the summer blockbusters start working their way towards home release.

Yes, the bricks-and-mortar chains have been hit from all over. Netflix (NASDAQ:NFLX) and even Wal-Mart (NYSE:WMT) are making inroads in direct DVD delivery, while studios like Sony (NYSE:SNE) and Time Warner (NYSE:TWX) are teaming up for the Movielink on-demand service. But it's going to take a lot more than that to squeeze out the leaders.

If you ask me, the fact that the chains have taken to reinvention by expanding their subscription plans, video game offerings, and resale items shows that they won't go down without a fight. So, grab the popcorn. It's going to be a battle worth watching.

Is the third Potter the best of the lot? Which summer blockbuster are you looking forward to the most? All this and more -- in theGreat Moviesdiscussion board. Only on

Longtime Fool contributor Rick Munarriz singled out Netflix in the Oct. 2002 edition of TMF Select -- which later becameMotley Fool Hidden Gems. It was a memorable call, given that the stock was bottoming out at a split-adjusted $5.45 a share at the time. Yes, Rick has been a Netflix customer -- and shareholder -- since 2002. He also owns stock in Hollywood Entertainment.