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New Year's to Test Retail Cannibalization of Rental

27 Dec, 2002 By: Kurt Indvik

So will Vin Diesel fans rush out to buy XXX Dec. 31 and watch it on New Year's Eve? That, of course, is a scenario Columbia TriStar Home Entertainment would dearly love to see. And that would serve to epitomize the trend that has manifested itself during this holiday season of sellthrough DVD, where retail seems to have cannibalized rental, though to what true extent we do not yet know. Certainly Blockbuster has paid a price for what it expects will be a holiday downturn in its rental revenues.

This week, historically one of the busiest for rentailers, will be something of a barometer as to just how much the urge to buy has overtaken the rental mentality of the home video consumer, at least during this annual heightened period of consumerism. Certainly there will be many more owners of new DVD players this week than there were last week and they'll be looking to play as many DVDs on those machines as they can squeeze in between parades, football games and family gatherings. The idea of taking home and actually keeping recently released blockbuster movies to play on their new machines will be tantalizing. Of course, they could do that with VHS if the title was priced for sellthrough, which is something of a recent phenomenon for some new releases outside of the family genre. They won't be able to do that with XXX, since its VHS version is rental priced.

No doubt that New Year's Eve and New Year's Day are popular times for movie watching. A recent Blockbuster Video poll of customers around the world indicates families are most likely to spend a portion of New Year's Eve watching a movie and celebrating at home. Only those partiers in the United Kingdom and Australia tend to see a majority of their households celebrate the New Year's away from home. In such different locales as Hong Kong and Denmark, New Year's Eve day is the busiest day of the year for Blockbuster stores. The marriage of home video and New Year celebrations seems to be a worldwide phenomenon.

We have only just posted our online poll asking how rentailers are faring this holiday so I can't yet comment on what this informal survey may show. I will be curious to see how it progresses as we move through this week. But I cannot help but think that a majority of the nearly 40 percent of U.S. households with at least one DVD player (probably more than 11 million new owners than last year at this time) will be watching at least one movie they own on New Year's Eve. That will certainly have an impact on rentals, in my opinion.

Buzz Back and tell me how you're doing this season.

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