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Sellthrough styles are evolving, leaving rental behind

28 Nov, 2002 By: Thomas K. Arnold

We're seeing two different strategies when it comes to studios marketing their DVDs: dump and run, and product management.

The dump-and-runners — we all know who they are — flood the market with their latest big theatrical DVD releases and hope the sheer ubiquitousness of their product will boost sales. The down side is that in some areas they may run out, while in others they have a big surplus — but in the end they hope it will all shake out and, besides, there's a minimum of tracking and paperwork.

The product managers carefully analyze each market and ship accordingly; then, when a retailer runs out, they immediately ship more. Stores are not flooded with their product; the product goes where it will sell and then gets replenished. The down side here is that this can be a taxing proposition, with a lot of analysis and research — but in the end returns are minimized and that alone is worth the hassle.

Each side says their approach works better to achieve the end goal: maximizing sales. And it's interesting to note that while last year studios were crowing about first-day and first-week sales numbers, this year the battle for bragging rights seems to be around first-day selloff, with DreamWorks maintaining Spirit's selloff rate of 29 percent was much better than anyone else's.

What's interesting about all this is that no one's even mentioning rental. Studios are infatuated with the new collector mentality among consumers; rental is almost an afterthought. Whereas we used to hear studios boast about prebook numbers on hot rental titles — remember the Pulp Fiction versus Die Hard battle of a few years back? — or even first-week rental proceeds (the notorious Green Mile versus Sixth Sense scuffle), the studios' sole concern these days appears to be what consumers are buying and how much of it.

This, despite the fact that most video sales to rental dealers are through revenue-sharing programs, which you'd think would give the studios more of an incentive.

But this just shows you how times have changed. This business was built on rental and now no one cares. Even Blockbuster says it wants to make a big push into sellthrough, while limiting rental to monthly subscriptions (my interpretation).

As a result, terms like “turns per copy” have lost their relevance. Whether this trend continues into the newyear, with video rentals ultimately ceding the transient portion of the home video business to video-on-demand or rental will stage a comeback, remains to be seen.

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