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TK's MORNING BUZZ: Next Year the Rental-Priced VHS Cassette Will Take a Summer Vacation From Which It Won't Return

6 Jul, 2001 By: Thomas K. Arnold

Rental-cassette pricing is starting to appear more and more ridiculous in light of the rapid gains made by DVD.

I'm going to step up my prediction that the rental-priced VHS cassette willbe gone in two years. I think it will be gone long before that -- maybe even bynext summer, assuming that DVD's growth streak will continue in both direction and speed.

The effective price of VHS cassettes has fallen dramatically over the lastfew years, boiled down by copy-depth programs and widescale revenue-sharing.Now that MGM Home Entertainment has taken the bold lead of scrapping programs and lowering the list price, first to $45 on Hannibal and now to $40 on Heartbreakers, I think we're going to start seeing other studios follow suit, as the ridiculousness of concepts like goals, matrices and baselines takeshold.

From there, it's just a short hop to standard DVD pricing, which appears to be settling in at a standard list of around $27 -- just low enough for consumers to buy for less than $20 retail.

As retailers start seeing more and more of their rental dollars generated by DVD, they're going to become increasingly reluctant to spend more money for acassette than for a disc, particularly when the disc is packed with special features and thus has much greater selloff potential.

At the same time, because DVDs are currently released out of the gate at asellthrough price, consumers are becoming conditioned that they can buy movies as soon as they hit video.

Combined, those two factors are making the VHS rental cassette obsolete. DVDpricing may be headed toward two tiers, but I predict VHS has nowhere to go but down.

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

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