"There's a reason why netflix killed blockbuster."

That reason is due to something you stated, yourself - "change." The movie renting industry is not dying. It has just taken a change; a much necessary one at that. Now, lets take a step back and look at your idea. You want to open a physical location to rent movies of specialty. Your customer base will be limited to a ~15 mile radius. After witnessing Netflix putting the "Blockbusters" out of business, doesn't this make you worry that your investment may not be a good one? You also made mention of a theatre that plays older movies and serves gourmet dinner, and they happen to do very well. It is my belief that they do well not only because of bringing a new taste of movies to the 'big screen' but also because they have created a full experience for their customer. It's more than just a movie -- It's relaxation in more than just 'stadium seats' and the food must be good! What do you feel you can offer your customers in addition to making these movies available for rent? It would not cost much for Netflix to offer the same type movies that you intend to offer (unless they do already). For someone who has a taste for classics, signing up for Netflix may be an all around better value (as Netflix can afford to offer lower rates, you cannot).

Another thing to consider is time (with respect to age). It is within your belief that younger people have access and desire to watch lame films and burn them for copies. If you plan to target the older generations, what is your long term plan for when they die? Your target market is depleting!

I think part of your general idea is a good one. Bringing back older films. The part I disagree with is that you want to bring it back for the enthusiasts...or even those with a mild interest. You must create an experience for the customer that is unique to their alternatives...and these alternatives would be all types of entertainment.

If I were you, I'd consider opening one of those classic theatres that you mentioned in a different geographic area. I'm 23, Live in Virginia Beach, and I would DEFINITLY attend that type of theatre. I just met someone (21 y.o. male) about 10 minutes ago and discussed this situation and the theatre and he sounded thrilled about such a theatre! It is so easily marketable, however your entire idea, I do not find as being so. Best of luck in whatver you decide to do!