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Many Consumers Engage in Free Movie Trading

3 May, 2004 By: Stephanie Prange

Now that Blockbuster is launching into the movie-trading business with abandon, it occurred to me that consumers engage in movie trading amongst themselves all the time — and at no charge.

Just last week, the kids in my neighborhood were asking neighbors if they had a copy of The Haunted Mansion and if they might borrow it. Granted, I live in a particularly clubby and social neighborhood, but this sort of trading no doubt happens between friends, family and neighbors everywhere.

Now, I'm not going to suggest that the studios go after my neighbors, as they are making plenty of money on the sale of DVDs and there's no law against this kind of casual sharing. Certainly, neighbors do and have done the same thing with titles they rent.

But it does make me take notice of its effect on windows. Most rental dealers will tell you that titles die in a matter of weeks, mirroring the theatrical business. Indeed, this phenomenon started with Blockbuster's drive to have consumers “Go home happy” with the hit title they wanted through extreme copy depth. Now, instead of going to Blockbuster, consumers can “rent” from neighbors and friends.

The sellthrough business has shortened legs even more than did the copy-depth drive of the late 1990s. Most studio execs, like their theatrical brethren, say the first-week DVD sales are key. That's when studios realize the majority of a title's income. I see no hope or, indeed, interest in reversing this trend. It is merely a reality of the video business.

Independent retailers will have to adjust, as no doubt many scrappy competitors already have, by turning over inventory more quickly, by merchandising niche product that mass merchants don't, and by engaging in movie trading, heavy sales of previously viewed titles or other new business models.

It's not only the sellthrough business shortening windows. The video-on-demand bogeyman may finally be gaining steam. A recent study found that movies on demand (MOD) orders have surpassed pay-per-view (PPV) movie orders on In Demand Network. According to iND research, December 2003 was the first month in which there were more movie orders via MOD than PPV. Titles with 30-day windows averaged almost double the buy rates of titles with longer release dates.

All indications are that the savvy retailer of the future will have to pay heed to shortened windows and move product more quickly than ever. By next weekend, everyone in my neighborhood will have seen The Haunted Mansion, and they'll be looking for what's next.

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