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THE MORNING BUZZ: Use DVD To Make Collectors Out Of Renters

22 Apr, 2002 By: Thomas K. Arnold

I had an interesting conversation the other day with our art director. He's worried about the future of video and told me that when true video-on-demand arrives, “I'm there, man. Think about it – any movie you want to see, when you want it, at the click of a button. Why would I ever want to go to a video store again?”

His comments underscore the importance of converting packaged media consumers into buyers rather than renters – a bold step, I know, but one I happen to believe is vital for the home video business to survive.

We're always hearing talk about VOD. It's right around the corner. It'll never happen. It's coming, slowly but surely. It's almost here – no, wait, the economy's gone south and investors are shying away from anything speculative, so video rental stores have at least five or 10 years left.

I've been hearing that “five or 10 years” line for the last 14 years, ever since I began writing about our industry for Video Store Magazine.

I have always believed that even true VOD wouldn't completely kill video rental, but the more I talk with people like our art director, the more I believe there is definitely a faction out there that doesn't care what form their movie at home takes – they just want to watch movies at home with a minimum of effort.

For these people, going out to a video store to rent a video is a hassle, not a social experience. They want instant gratification and renting a video takes time they'd rather not spend – and then there's the added hassle of bringing the movie back. Heck, our art director didn't even flinch when I told him watching a video “on demand” might set him back $3.95 or $4.95. “That's what my video store is already charging for a rental,” he said. “Yeah, it's for three nights, but I still only watch the movie once.”

People like this have no interest in collecting movies en masse. Oh, sure, they might buy a DVD every now and then of a film they just have to have, but by and large their home movie passion is a transient one – and it might as well be just another click of the remote.

That's why retailers have to start pushing DVDs as both affordable and convenient. Catalog prices are tumbling down, with Wal-Mart already boasting a huge selection of watchable films for $5.88 apiece. Meanwhile, new releases are routinely available for $15 or $16 at places like Best Buy, and if certain studio heads have their way new release prices are in for a downward slide as well.

Regardless – it is imperative that retailers (and by this I mean all retailers, even tiny mom-and-pops who still view sellthrough as a foreign concept) start pushing the heck out of DVDs as a way to get consumers into the habit of collecting movies. Bring in as many low-cost catalog titles as you can afford. Start selling (and buying) used DVDs. And don't give up on new releases. Buy them as cheaply as you can, even if it means going to Best Buy or Fry's, and carry whatever's new and hot if for no other reason than to show your customers that you can, that you are a full-service home movie store. Then target frequent renters and offer them incentives like lease-to-own to get them to start building their own libraries.

As I've stated previously, a home library of DVDs is the ultimate form of video-on-demand – and at $5 or even $10, the cost differential between a rental (particularly a pricier, multiday rental) and a sale starts to blur.

No wonder Wal-Mart is making an all-out effort to convert renters into buyers with slogans like “No late fee…You own it!”

They've seen the writing on the wall. Just because the sky hasn't fallen on video rental yet doesn't mean it's never going to fall.

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