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THE MORNING BUZZ: Taking the Industry's Post-Holiday Pulse

26 Dec, 2001 By: Holly J. Wagner

I have a theory, but without your help I can't really prove it. You folks, on the other hand, are in a perfect position to test it.

Video entertainment has weathered a lot of economic downturns. It's been called recession-proof, inflation-proof and even stock market-proof. Sometimes economic crisis in other industries actually helps our business. Video is sort of the unofficial barometer of economic conditions, or at least consumer confidence.

This is the year DVD has come of age. Prices for discs and players are down. Great titles abound. Sales have been phenomenal in light of other industries sagging. We all knew this would be the season of DVD and by retail reports, it is.

So play along. Be my lab rats, or, more accurately, groundhogs. I'm watching for the economy's shadow, but you'll have to help me see it. Here's my theory (and I'm inviting you all to support or contest it):

DVD player prices are down. If that played as strongly into the holiday gift season as we expected, I predict your stores are busy today and will be for at least a couple of weeks. DVD players topped numerous gift lists and, doubtless, some folks got their wish. Some of your customers are about to be converts and, for the next couple of weeks, will be renting DVDs like crazy to play with the new family toy. In that case, DVD rentals will be up overall and as a percentage of total rentals.

On the other hand, those shiny, sexy little discs make excellent presents for anyone who already has a player. Prices are reasonable and almost everyone with a player still wants something on DVD. Sellthrough numbers on top titles have broken record after record in the fourth quarter. If the economy or consumer confidence is still sagging, I think most of those discs will have landed in the hands of folks who already have players. In that case, DVD rentals may be down overall and stable as a percentage of total rentals over the next couple of weeks.

So let me know how it goes over the next couple of weeks and we'll see if any pattern emerges.

I could be wrong.

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