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TK's MORNING BUZZ: There's a Brewing Storm Beneath the Calm on the DVD Front That Will Rock the Status Quo

2 Aug, 2001 By: Thomas K. Arnold

It's almost funny, how calm and peaceful things are on the DVD front these days. Everyone's high on the format -- sales records are broken almost every week; reports float in from retailers that DVD is selling as well as, or better than, VHS; and studio executives are exceeding goals to the point where one recently said about a title his studio released a few months back: "It's amazing -- I keep on putting them out, and they keep on selling. It's like the early days of VHS."

Yet beneath this calm is a brewing storm. Come next year, there are going to be some surprises. Top studio minds are grappling with such issues as two-tier pricing and rental windows, and I'm fairly certain at least one major studio will drastically rock the status quo in an attempt to gain a share of burgeoning DVD rental revenues.

As you read this, meetings are being held, options are being weighed, decisions are being made and remade. In a sense, DVD has been much too successful for its own good. Studios are making more money than they ever expected, and yet they want more. DVD was never intended to be a rental product, and yet DVD rental is one of our industry's biggest growth areas. Studios are determined to get a piece of the pie, and they're going to do everything they can to get it.

It's not even a question any longer of the studios needing the money. DVD sellthrough sales are so huge that DVD rental cannibalization isn't nearly the problem it was once thought to be. Anything the studios are losing on the VHS rental end they're more than making up with DVD sellthrough sales.

But it's the principle. DVD was supposed to finally give studios control over their product, but the development of a strong rental channel wrested that control right out of their grasp, just as it did with VHS 20 years earlier.

The studios are determined not to let the same thing happen twice -- even if it means going against the old rule of thumb, "If it ain't broke, don't fix it."

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

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