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THE MORNING BUZZ: Meet the Bears and Bulls of Home Video

11 Jul, 2002 By: Thomas K. Arnold

THE MORNING BUZZ: Pondering the Bears and Bulls of Home VideoOn the eve of the 21st annual VSDA convention, which opens Tuesday in Las Vegas, our industry finds itself with a bona fide juggernaut but all sorts of different theories on how best to ride it.

I'm referring, of course, to DVD. How powerful is DVD? Put it this way: no one questions that the digital disc will one day -- soon -- replace the VHS cassette; the only question is how soon and how completely.

I had a telling conservation with two executives recently. David Bishop, president of the MGM Home Entertainment Group, told me more than 80 percent of his studio's video sales now come from DVD. And Glenn Ross, president of Family Home Entertainment, told me that while last year's Barbie in the Nutcracker video sales were 90 percent VHS and 10 percent DVD, the split for this year's Barbie as Rapunzel will likely be 50-50.

That DVD is a phenomenal success, however, is about the only thing Hollywood's studio minds agree on.

Some executives want to beat DVD prices downward, to the $10-$12 range, for a ubiquitous presence in convenience stores, drug stores and all sorts of other retail outlets that cater to the impulse buyer.

Other executives want to push prices for new releases higher, although no one's talking about anywhere near the old VHS rental model. At our recent DVD at 5 celebration, it became clear that such a plan was dead in the water and revival appears unlikely.

Suppliers are also at odds over how best to maximize their catalogs. Some studios have already blown out most of their catalog titles, encouraged by the high buy rates of the early adopter. Other studios, like Universal, are waiting for the penetration rate to get a bit higher before they release library titles en masse.

There are also differing strategies on the life cycle of a title. Some suppliers treat DVDs like videocassettes and reprice them to $14.98 or $9.98 after six or so months.

Others keep adding bells and whistles to subsequent releases, like Artisan with Terminator 2 and now Universal with Dr. Seuss' How the Grinch Stole Christmas.

If there's a trend to which more and more studios seem to be subscribing, it's treating a DVD release like an event -- giving it that theatrical flair, presenting it to the public as something new and really cool instead of simply a boxed movie.

If that trend continues, DVD may be a resounding success already, but believe me, you ain't seen nothin' yet!



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