Sega Channel cut my game rental costs in half (sorry Blockbuster) and I played so many games I would have never bothered renting. Good times.
* For hit movies buy an obscene number of copies to rent month 1
* Sell off some for a discount as the rentals dwindled
* Discount anything over a reasonable backlog / duplicates set shortly after
Offhand I think they tried to time this to end well enough before the release windows slid to TV + Ads distribution.
* Rent the backlog until dead or until they sold in a discount bin
Some independent shops also competed. I recall my parents kindly rented a few less popular games they happened to carry. Not sure about videos, might have been better for stuff not mainstream enough at the big national chain.