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THE MORNING BUZZ: Distributors Looking to Capitalize on DVD Growth

18 Apr, 2002 By: Kurt Indvik

The travails and woes of the video distribution business have been well documented over the past several years and I don't intend to revisit them today. Suffice to say, the home video business has changed on so many different fronts and many of those changes have conspired to make life (yes, even existence) difficult if not impossible for distributors. This has resulted in fewer distributors in business going into this week's NAVD meeting in Los Angeles than there were a year ago.

But while the association's dwindling membership may cause some to wonder if the group will soon follow its former members into that great warehouse in the sky, in actuality, those hardy souls who remain in this business may be lean and mean enough to actually enjoy something of a renaissance, at least for the next few years.

The emergence of DVD in the last several years as the soon-to-be dominant home video platform has reinvigorated the home video retail industry. And while the margins on DVD have made it even tougher on the middleman, the fact is that DVD is enlarging the home video pie overall, especially in markets where distributors can grow their businesses; non-specialty stores.

As senior editor Joan Villa writes, the difficult times have caused those distributors still in business today to have become even more efficient in their operations and focused in their customer service, to both counteract the lower margins and to raise their value as key service providers to a growing cadre of non-specialty retailers who are anxious to build up their own home video businesses.

Music stores, supermarkets, e-commerce sites, book stores, drug stores, book stores and libraries are just some of the categories that are growing their video businesses, driven by DVD's primarily sellthrough nature. These businesses need the sort of value-added assistance and small-package shipping that only distributors can do. Mass merchants who deal directly with studios are also using distributors for incremental, quick replenishment business.

“With DVD exploding, distribution is needed more than ever,” said Steve Scavelli, president of New York-based Flash Distributors.

So while those gathering around the pool at NAVD conference cocktail receptions this coming week may feel quieter than ever, one might sense a buzz of optimism as distributors look forward to enjoying some payback for the tough years they have weathered, having emerged as highly efficient, customer-centric operations ready to help a growing retail industry capitalize on DVD.

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