The Growing Impact of Previously Viewed/Used Sales25 Apr, 2004 By: Kurt Indvik
We have spent a good deal of column inches in Video Store Magazine on the subject of the burgeoning previously viewed and used trade-in economy in home video over the past year, and with good reason. It continues to have a major and beneficial impact on the video specialty business.
In this week's issue, we have several related items, not the least of which is our annual Top 100 report, which includes data on the top retail leaders in the sales of previously viewed DVD and VHS.
Of course, one of the big news stories of last week was Blockbuster's announcement that it would offer a DVD trade-in program, offering store credit for DVDs brought in, in about 2,000 stores by the end of the year. CEO John Antioco believes the business could turn out to be one of the chain's most profitable business lines, and, of course, is a great way to drive traffic into the store.
Blockbuster, meanwhile, generated some $222 million in the sale of previously viewed DVDs and VHS in 2003 to lead the pack, followed by Hollywood Video with $139 million and Movie Gallery with $57 million, according to Video Store Magazine Market Research. Check out this section of the Top 100 for the other seven retailers in this category.
It was also interesting to note that the previously viewed business has become significant enough that most specialty retailers are balking at DVD revenue-sharing deals because it would put limitations on their ability for quick turnaround of rental copies headed for the previously viewed bin, according to distributors meeting last week at the NAVD conference in Santa Monica, Calif. Coverage of that meeting is also in this week's issue of Video Store Magazine.
Earlier this year, the Video Buying Group released data that showed that its members were enjoying higher returns on their rental inventory investment when they put rental copies out for sale at about $9.99 - $12.00 after the copy's sixth to eighth rental turn.
Previously viewed sales are expected to top $1 billion in 2004. This year's Top 10 in this category saw previously viewed account for anywhere from 5 percent (Blockbuster) up to 16 percent (Easy Video) of their total annual revenue. How the business will fare in the future is anyone's guess, but it appears that the concept of trade-ins will fuel more product for sale, which ought to potentially change the dynamic of this side of the business. How will used (previously owned) prices compare with previously viewed (rented) prices, and what impact will that have on overall ROI for Blockbuster and other chains that try the concept?
I'd welcome an e-mail with your thoughts on this.