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TK's MORNING BUZZ: NARM Retailers Are Jumping on the DVD Bandwagon--Even at the Expense of Music CDs

14 Sep, 2000 By: Thomas K. Arnold

NARM chief Pam Horovitz with Gil Wachsman of the Musicland Stores Corp. at the opening reception to the trade association's annual fall conference at the Coronado Marriott in Coronado, Calif., Sept. 13. (Hive News Photo)

Forget about DVD-Audio. Music retailers, at least at this point, are either skeptical or disinterested.

DVD-Video is what commands their attention, and at the annual fall conference of the National Association of Recording Merchandisers (NARM), now underway in Coronado, Calif., some of the nation's biggest music retailers are talking openly of beefing up their DVD inventories even if it means cutting back on music CDs.

Interest is so high that Universal Studios Home Video president Craig Kornblau took a cadre of top sales and marketing executives to this resort town just west of San Diego to participate in Universal Music and Video Distribution's gala product presentation last night.

After huddling with top clients like Best Buy's Joe Pagano and Musicland Stores Corp.'s Gil Wachsman at an elaborately catered reception, Kornblau took the stage to excite the retail troops about his studio's fourth-quarter DVD lineup, which includes 12 titles with a collective boxoffice gross of $1.9 billion.

"We're on a tear," Kornblau told retailers, and there are few who would, or could, disagree.

Kornblau's DVD marketing assault on the music confab isn't surprising, given the aggressiveness with which music retailers are jumping on the DVD bandwagon. Recent numbers show that while Best Buy is still the nation's No. 1 retailer of DVD software, Wal-Mart is a close second.

But music retailers I spoke with all agree there's an opportunity, with DVD a natural extension of their existing product line--and a much better fit than VHS. As one said, "We've been selling 5-inch discs for 15 years now. Why should DVD be any different?"

They further question whether Wal-Mart or any of the other mass merchants, for that matter, have the demographics to sustain their momentum-of-the-moment. They see music retailers as the dominant force in DVD sales, and their going to work their tails off to make this vision happen.

I do see a fit here. If you remember back to the middle 1980s, it was music retailers who took an early lead in laserdisc sales. My guess is the primary reason the laserdisc never really took off was timing. The 12-inch laserdisc came around at the same exact moment that the 12-inch vinyl LP was being phased out; even the packaging was the same size. No wonder consumers were skeptical.

But with DVD, it's a different story. CDs are still the dominant music format, and its eventual (theoretically, at least) successor, DVD-Audio, doesn't look materially different.

The 5-inch disc rules on all fronts, and music retailers are wise to take what for them is really a very small step.



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