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Indie Retailer Resilience Pays Off in the DVD Era

21 Aug, 2003 By: Thomas K. Arnold

Independent video retailers are a resilient lot. During the recent VSDA convention and, a week later, at Sunsplash, I had the chance to chat with more than a dozen indies, all of whom have weathered the various Great Shakeouts and are still in business today, long after many of our industry's top minds predicted they would be gone.

One studio executive recently told me that indies still account for about 40 percent of the rental business. And if rentals are up, as our market research department and most other credible sources report, then the indies must be doing quite well for themselves.

My conversations reinforced that view, for the most part. Low-unit pricing for DVD and the virtual disappearance of the rental-priced cassette have rendered the level-playing-field debate all but irrelevant for most.

And the booming market for used DVDs lets retailers not only squeeze every last drop of dough out of their over-the-hill rental titles, but also counter the new sellthrough focus of the big chains. It's one thing to try to sell new copies of Chicago for $15, as Wal-Mart is doing. It's another to offer your loyal customers previously viewed copies for $10 just a few weeks later.

Video Store Magazine market research estimates PVT (previously viewed title) sales generated more than $100 million in July, up 29 percent from the average monthly take in the first six months of this year. My prediction: By the end of this year, we're going to see average monthly PVT sales double.

One reason: eBay. The online auction house is mounting an aggressive pitch to get retailers to sell used videos (particularly DVDs) online. EBay “instructors” were at both the VSDA convention and at Sunsplash, and in each case their talks were so convincing that retailers who might have gone in with a ho-hum attitude were eagerly scribbling notes and peppering the instructor with questions before the seminars were half over.

This was clearly an encouraging sign, and one that attests to the resourcefulness of retailers who in the past 10 or more years have encountered all sorts of obstacles and hurdles, from the near-recession of the early 1990s to the near-recession of the new millennium, from the rise of the big chains to the pre-DVD wearing-off of the video rental habit.

There's an old saying: Only the strong survive.

Rest assured, they have.

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