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TK's MORNING BUZZ: The Devaluation of the Videocassette Has Finally Materialized -- It's Everywhere You Look

1 Jun, 2001 By: Thomas K. Arnold

Remember back when everyone was in a tizzy over McDonald's selling videos as premiums? Critics accused the fast-food chain of devaluing video, and retailers as well as the VSDA went into a huff over deals between studios like Orion and Paramount and fast-food restaurants that were using deeply discounted videos to get people to buy more burgers, shakes and fries.

Now, what do we have? Our publisher, Don Rosenberg, just forwarded me a pitch from Columbia House in which the beleaguered mail-order operation is offering new subscribers this incentive: Five VHS videos for 1 cent each, or four DVDs for 49 cents each.

"What's this?" Rosenberg asks. "Are we to believe one DVD is worth 49 cassettes? I tell you, videocassettes are becoming the Rodney Dangerfield of our industry."

Indeed. The threatened devaluation of the early 1990s has materialized and is all around us, everywhere you look. The Columbia House pitch is just the latest example. The Target store near my home in Carlsbad has a rack of shrink-wrapped cassettes right in front, just before you hit the checkout lines, selling for $7.99 and less -- all of them recent repricings. "You're giving them away," I told a clerk recently. "Can I get DVDs at that price?" "Oh, no," she responded. "That's only for videos."

Then, yesterday morning, our publications coordinator came into my office and told me she saw a stack of hit movies at Blockbuster selling for about $3 each -- all of them used VHS cassettes. "And these aren't old movies I never heard of," she said. "They're real recent."

Ah yes, the poor old VHS cassette. It don't get no respect.

All of which makes it even more strange that studios are still slapping suggested retail prices of $100 or more on new rental cassettes, five times that of new DVDs. Granted, the actual price retailers pay is significantly lower, but even at $40, a new rental cassette still costs more than twice what a DVD wholesales for.

Methinks our present two-tier pricing system is on the verge of a collapse.

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

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