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TK's MORNING BUZZ: A Recession Would Be Deadly to Video Retailing, Clouding Even the Bright Future of DVD

21 Dec, 2000 By: Thomas K. Arnold

As the year winds down to a close, we're hearing more and more talk that the country may be in for another recession. Economic growth is slowing, and investors are nervous that the good times we've all been enjoying for so long now may seen be coming to an end.

Traditional wisdom suggests that the entertainment industry suffers less than other businesses during a recession, but video retailers who have been in business for awhile know full well that this no longer holds true.

During the last recession, in the early 1990s, the video retail industry underwent its first real shakeout. Renting a video was still seen as a tremendous bargain by consumers, but somehow that wasn't enough to save video rentailers from the overall economic downturn that gripped the nation.

Should another recession arise, expect video retailers to fare even worse--despite the success of DVD. When money's tight, consumers go for more bang for the buck, but the sad truth is that despite the relative cheapness of renting a video--or even buying a DVD of a $200 million movie, compared to, say, buying a CD by an unknown band for just a little less--the spectrum of free entertainment options has grown so wide that video dealers will be even less immune from the woes of a recession than they were a decade ago.

Sure, you can rent a video for $2 and buy a night's worth of entertainment, but television has improved mightily over the past 10 years. There are more channels than ever before, and many more movies playing on the tube for free.

Then there's the Internet factor, with a wealth of free information and entertainment just a click of the computer mouse away.

A recession, I fear, would be deadly to video retailing, clouding even the bright future of DVD.

Unfortunately, at this point there's not much any of us can do but keep our fingers crossed and pray.

Then again, that's what many retailers have been doing for quite some time already.

Comments? Contact TK directly at:TKArnold@aol.com

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