Log in


TK's MORNING BUZZ: Sorry, John, but the Movie Buyers of Today Are Going to Keep Buying Movies, Even After VOD Becomes a Viable Reality

20 Apr, 2001 By: Thomas K. Arnold

Pardon me, but I believe Blockbuster chief John Antioco really blew it yesterday.

He said something I simply can't fathom, and listening in on his conference call with analysts I almost spilled my coffee when he said what he did. I was grateful the "mute" button had been turned on by the moderator because otherwise I might have shouted something most ungentlemanly.

Antioco told analysts he believes video-on-demand, when it finally arrives, will cannibalize sellthrough more than rental. "It is my point of view that the convenience of VOD will create an especially negative impact on the sale of prepackaged retail product, even more so than rental," he said. "Many customers buy at Wal-Mart simply out of the convenience of one-stop shopping. And these are the very same convenience-oriented customers who will trade down from a $15 DVD to a $5 VOD transaction."

Now, wait just a minute. Everyone, EVERYONE with whom I have ever spoken -- analysts, studio executives, retailers, distributors, fellow journalists -- has felt that video-on-demand, when it comes, will hurt video rentals, because consumers will be able to "rent" videos, for a nominal fee, over their cable lines or the Internet and get full VCR functionality -- without having to make two trips to the video store, one to pick up the movie and the other, to return it.

I can understand that point of view, and while I don't think VOD will kill video rental, I'm certain it will have an impact. While a lot of people like the shopping experience and enjoy going out to a video store to rent a movie, the return trip can often be a pain. And for that reason, and that reason alone, I expect VOD to siphon off a chunk of the video-renting public.

The impact on sellthrough, however, will be minimal. For one thing, people are, by nature, collectors. I don't know anyone who doesn't have at least 100 CDs and 50 or more movies, VHS as well as DVD. On top of that, 40% of video sellthrough sales are to the gift market. What are you going to give Mom on Mother's Day -- a digital download of Terms of Endearment? I don't think so.

I think John is stretching things when he argues that people who currently buy movies at Wal-Mart do so only because it's convenient, and will eagerly switch to VOD. If the mass merchant crowd is so bent on convenience, then why has every attempt by the big discounters to crack the video rental market failed?

What's more, people don't plop down $15 or $20 for a movie out of convenience. Impulse purchase or not, they buy movies because they want to buy movies, because they want to own them, collect them, and watch them over and over again.

Keep in mind that while $20 may not be a lot of money to John Antioco, it's a tidy sum to the average consumer -- particularly the average Wal-Mart consumer (of which, yes, I am one). And guys like us don't fork over 20 bucks for a movie just because it happens to be there, sitting on an endcap.

I'm sorry, John, but the movie buyers of today are going to keep buying movies, even after VOD becomes a viable reality. The renters, well, we'll just have to wait and see.

Contact TK directly at:TKArnold@aol.com

Add Comment