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THE MORNING BUZZ: The Growing Phenom That Is Used DVD

13 Oct, 2002 By: Kurt Indvik

Our online reader poll this week on the volume of previously viewed DVD sales underscores an important factor in the equation retailers must solve in determining how much to spend on deepening their DVD copies.

It is heartening to see that about 21 percent of the readers that responded to the poll bring in 26 percent or more of their revenues from the sale of previously viewed DVDs. Almost 25 percent of IVRs get between 11 percent and 25 percent of their revenues from-previously viewed sales. But there is still significant growth to be had, as more than 54 percent of respondents claimed they generate 10 percent or less of their revenue from used DVD sales.

At last week's East Coast Video Show in Atlantic City, several of the seminars centered on the issue of previously viewed as a factor in how to balance one's DVD -to-VHS ratio. Some made the point that retailers need to consider the quick turnaround of DVDs from the rental shelf to the sales bin in their copy-depth calculations. Tom Hannah, owner of Video Quest in Joliet, Ill., calls this a "one-way rental," considering it an extension of the value of his rental inventory.

Blockbuster has spent a lot of marketing dollars educating consumers on the availability of the used DVD as a viable alternative to rushing out to the mass merchants to buy the latest hit when it streets. There will always be those consumers that have to have the product right away and there will always be the blockbuster title that commands that sort of reaction (if priced correctly).

But the "new" vs. "used" decision for consumers can be made easier by the perceived value of the used product and its timely availability, which is why retailers should be buying deeper in DVD and moving a portion of their rental inventory over within a few weeks of debut to the sales bin and repackaging the used product for sale.

It's fair to say that consumers still have a high perceived value of DVD relative to its current suggested retail price, but the growing realization that if they can just wait for two weeks they can buy it for almost 50 percent off is going to continue to fuel this side of the business.

So to those retailers who are still more or less dipping their toes in the previously viewed business with less than 10 percent of their revenues generated from this model, I'd say jump in, the water is fine and getting warmer all the time.

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