THE MORNING BUZZ: Poll Shows Retailers Grabbing Hold of Used DVD Opportunity30 Sep, 2002 By: Kurt Indvik
In our current online poll (off to the right of this very column), it seems that a fair number of retailers are definitely grabbing hold of the brass ring (or maybe it's a life raft for some) of selling off their used DVDs.
The poll may have changed since I posted this column, but as of last Friday the results showed almost 90 percent of the respondents are generating revenue from the sale of previously viewed DVDs. While the majority of retailers say that they generate between 1 and 10 percent of their revenues in this category, I was also heartened to see about 20 percent of the respondents reporting between 11 and 25 percent of their revenues are coming from used DVD sales.
If any of you have been reading these columns and the columns in Video Store Magazine, you are no doubt aware that rental revenues have been dropping by double digits in the past several months, even as DVD rentals grow by triple digits, and our market research group predicts a drop of some 7 percent in rental revenues this year from last when it's all said and done.
Certainly one way to regain some of those lost revenues, if you happen to be experiencing this very same trend, is to find a way to join the sellthrough business that is transforming home video as a result of DVD. Our 2001 Top 100 research showed that retailers were selling off nearly one quarter of their new release inventory (both DVD and VHS) after two months, and I'll bet that when the next Top 100 rolls around that time span will have shortened.
Anecdotally we hear that some retailers are aggressively buying deeper in certain hit titles, getting several turns out of each DVD copy and then selling off significant portions of those titles after several weeks, not months. The fact is, the shelf life of home video may well be squeezed with an ever-larger wave of releases hitting the streets and you have to be there with the product (and even earlier with the message of its availability) when your customer is thinking about buying it.
It's all about "training" your customers to think about you when they think about buying home video. The major specialty chains are taking sellthrough seriously. The smaller operators must find their niche in this evolving marketplace by looking for models that allow them to capture their share of the sellthrough dollar.