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TK's MORNING BUZZ: Will Studios Raise Prices on DVD or Develop an Exclusive Rental Window to Make Up for Lost Cassette Revenue?

6 Apr, 2001 By: Thomas K. Arnold

Word continues to rumble in that studios are having a tough time meeting goal on rental titles. Pose that question to any studio executive and you'll likely get a swift denial, but actions speak otherwise. Indeed, studios are doing everything in their power, it seems, to boost sales.

Paramount Home Video is getting a lot more liberal with free goods. Universal Studios Home Video is getting ready to let independent retailers bring in the studio's rental product on an output basis, through Rentrak Corp.

But these and other moves -- and rest assured, more are coming -- are simply stopgap measures. With Blockbuster conceding VHS rentals are down by as much as 15%, thanks to rapid growth in DVD rentals, sales of rental-priced VHS cassettes have nowhere to go but down.

Even studio moves to court indies -- and I believe what both Paramount and Universal are doing falls into this category -- are destined to fail, because the independents who are left are also preparing for the inevitable transition from VHS to DVD and are unlikely to up their buys regardless of how many incentives are thrown their way.

I've said it before, and I'll say it again: The rental-priced VHS cassette's days are numbered.

The next part of this equation is where it gets interesting. Will studios raise prices on DVD, or develop some sort of exclusive rental window (which amounts to the same thing), in the hopes of making up for lost cassette revenue?

Or will the whole business go sellthrough?

I don't even want to pretend to have the answer, but you know something? I don't think the studios do, either.

I do know one thing. If retailers have a preference, now is the time to make your feelings known.

Comments? Contact TK directly at:TKArnold@aol.com

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