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TK's MORNING BUZZ: Blockbuster's Logic Makes Dollars and Cents -- DVD Hardware and Software Should Be Marketed Together

26 Sep, 2001 By: Thomas K. Arnold

After yesterday's column, in which I questioned the ability of video rentailers to weather a recession, I received quite a few responses from dealers who said their business, year-over-year, was up by as much as 20%, and that they expected this upward trend to continue into the future.

Their optimism was due to many factors, including the public perception thatvideo rental was a bargain, as well as the surging popularity of DVD. A studyjust released yesterday by market research firm NPD Intelect projects DVD player sales to finish the year at 13 million units, twice as many as were sold last year.

Blockbuster, for one, is really upping its stake in DVD. Not only is the chain trimming back VHS inventories to make room for more discs in nearly all its 5,300-plus U.S. stores, but in time for the holiday season, executivesthere tell me, every Blockbuster store will be actively selling DVD players.

I say "actively" because Blockbuster isn't doing this merely as a customer convenience. To the contrary, Big Blue seems intent on being a player (pun intended) in the DVD hardware market, and will launch its DVD player sales by giving away a free rental card, good for 10 rentals, to anyone who buys amachine.

It's an aggressive strategy, and an approach I hope to see other video rental stores adopt as well. Even as a kid, I considered it silly that I had to buy my stereo at one place and my records at another. The only places that did both were the big department stores, but they got low marks in both selection and price so I never went there except to peruse the cutouts.

But I digress. My point is that hardware and software should be marketed together, and I applaud Blockbuster by doing what to me seems only logical.

Software has already crept into the big entertainment hardware stores -- witness Circuit City's abrupt transformation last year into a wanna-be Best Buy -- and it's high time the software guys wised up and began carrying hardware as well.

If there's one thing customers like more than price, it's convenience.

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

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