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TK's MORNING BUZZ: Video Retailers Must Work Harder Than Ever Just to Maintain Their Current, Falling Standard of Living

1 Nov, 2000 By: Thomas K. Arnold

I received an interesting phone call yesterday afternoon from a reporter for a major metropolitan newspaper that shall remain nameless.

He had some questions about the flow of venues for movies. He knew they came out first in theaters, but after their theatrical run, was it true that they went straight to Blockbuster before their general release on video?

I corrected the good gentleman, but I can hardly blame him for his misconception. Blockbuster now controls nearly 40% of the rental market, and with Big Blue's push into secondary markets, it's hardly surprising that to many, renting a video has become synonymous with renting a video from Blockbuster.

Where is that generic advertising campaign when we need it? The VSDA is once again hoping to get studios to fund a major national awareness drive, but I'll put it bluntly--it's not going to happen. The studios are convinced that only title-specific advertising works, and there's simply no way they're going to pitch in for an ad campaign that isn't focused solely on their product.

In the past, I have always felt that Blockbuster's incessant TV advertising benefits all retailers, since it trumpets the video rental experience. But with Blockbuster now reaping nearly half of all rental activity, Big Blue's ads benefit Blockbuster more than anyone else, more than ever before.

Ironically, Blockbuster is now cutting back on mass-market ads in favor of direct consumer marketing. What little benefit other retailers got from Blockbuster's "rent a video tonight" ads will soon be history, leaving them with nothing, nada, nil.

When the revenue-sharing steamroller first got started, there were great expectations that studios would follow through with massive post-street-date ad campaigns for rental titles, since they now had a vested interest in the product they sold. But that hasn't happened--thanks to output deals and guarantees, studios have no more concern about what happens to their rental titles once they are shipped to retailers than they did under the traditional buying model.

The end result of all this is that at a time when rental revenue is flat, and turns are down by around 8% or 9% from last year, less is being done to combat this malaise than ever before. A generic awareness campaign simply isn't going to happen, post-street-date advertising on rental product is few and far between, and even Blockbuster is all but giving up on mass-market advertising to pump up the video rental experience.

Is there a light at the end of the tunnel? I certainly don't see any--which means video retailers are going to have to work harder than ever just to maintain their current standard of living, which has fallen drastically in recent years.

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

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