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Challenges of a Maturing DVD Business

10 Jul, 2005 By: Kurt Indvik

Things you take for granted get harder as you get older. Those were the sentiments of many studio executives who addressed the challenges of maintaining growth in a maturing DVD market at last month's Fourth Annual Home Entertainment Summit: DVD Magic 8.

A recent survey of major retailers by Home Media Research brings to light a number of retail trends impacting the industry. Some of them are outlined in a story on page 1 of this week's issue, but consider these other items, too:

• The pace of retail inventory turnover continues to quicken as titles continue to flood the market. This impacts everyone. Pixar had to readjust its earnings based on expectations of a greater revenue intake on The Incredibles (see page 8). DreamWorks suffered a similar fate not too long ago regarding Shrek 2. Both are wildly successful titles, just not as successful as their corporate parents expected. I'm sure this is happening on different scales at suppliers big and small, as their titles' time on the shelf dwindle.

• The all-important catalog business is getting a lot of attention these days especially from major studios, as they try to differentiate themselves from the budget suppliers (see our cover story). The latest offering from Universal, the “Legacy Series,” (see page 35) is an example of how studios are trying to find new revenue opportunities for their higher-end catalog product without falling prey to discount pricing.

• Retailers also are putting more pressure on suppliers for exclusive promotions and, especially Best Buy, exclusive windows, as a way to earn their way onto store shelves, as you can read in another cover story this week.

• And finally (for this week anyway) the drumbeat continues on digital delivery and other distribution plans that seek to upset the status quo of distribution windows. The latest example is the new proposed digital distribution service ClickStar Inc., which last week garnered investment dollars from Intel (see page 8).

Yes, all in all, it's becoming harder for good 'ol DVD to just keep piling on the double-digit year-over-year growth. Still, it's got a few strong laps in those creaky legs yet.

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