I work at a pop culture store in Norman, Oklahoma where we've been renting anime videos/DVDs for a couple of years now.
You asked, 1. A friend of mine was insisting you have to have "commerically licensed" tapes or DVDs for rental, that it is illegal to rent store-bought tapes. I've never heard of this, and thinks he's talking out his butt. Anyone care to confirm this for me? Thanks."
I have also never heard of such a thing but we don't deal with anything but anime, so perhaps if you were trying to rent, SAVING PRIVATE RYAN, the rules might be different.
"2. For retailers with a rental section, how is that working for you (What do you charge, what types of anime perform well)?"
We charge $3.00+tax for two days rental. It has become an important source of revenue for us that has continued to expand with each month we've offered it as a service. Like yourself, we avoid any X-rated manga and have found audiences for everything else just fine.
"Is there a marked shift towards DVD these days?"
Yes. Don't bother investing in VHS at all. You'll have people try and convince you differently but VHS-only customers are the smallest percentage of our audience, as anime fans tend to be pretty far up the technology curve. Besides, most distributors aren't even making anime VHS anymore.
"How do you handle minors who want to rent? I won't be carrying any porno anime or anything but there's not a lot of anime I would rent to a kid without parental consent."
Most DVD's come with a age advisory on them and we follow that. More importantly, you'll come to know your customer base, their tolerances and preferences in time. Common sense will take care of 99.9% of your potential problems.
"3. For those that sell anime VHS or DVD, do you cross-pollinate with manga TPBs? I've been thinking about intermingling them here and there. Like Tower does, they put books on foreign cinema in and around their foreign rental section, and so forth (or they did before the local tower nixed most of their rentals)."
We've done this some but I've not noticed being too effective as a sales-ploy. We do shelf our DVD rentals RIGHT next to the manga shelf so, by creating a defined anime/manga section, we are cross-marketing in that sense. Don't forget also the mountain of merchandise that you sell also right alongside those rentals including anime action figures, t-shirts, keychains, stickers etc which are far more productive for us than similar materials for superhero comics, whose audience is usually breathless and broke just keeping up with their favorite titles.
Hope that helps, ROB VOLLMAR