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TK's MORNING BUZZ: When Will DVDs Pass the 50% Mark in Your Store?

7 May, 2001 By: Thomas K. Arnold

It is with a great deal of interest that I've read the growing number of missives from independent retailers who say they are so fed up with high prices for rental cassettes and complicated copy-depth programs that they are phasing out VHS completely and focusing on DVD.

Even under the most generous copy-depth and revenue-sharing deals, retailers are still paying at least twice as much per cassette as they are for new DVDs. And with the DVD penetration rate soaring and research showing that DVD households are much more active at the rental counter than their VCR-only counterparts, a growing number of retailers, it appears, believes the time for a transition is sooner rather than later.

Let's face it -- I don't think anyone out there doubts that in three to five years, the typical video store will carry primarily, if not solely, DVD. VHS cassettes may still be stocked as a convenience for longtime customers who are stubbornly clinging to their VCRs, chiefly because they use them for time-shifting, but even that base will ultimately erode as TV-tapers turn to Tivo and other set-top devices that outdo the VCR in every department.

But for the time being, VHS cassettes are still in the majority at most video stores, and the question I'd like to pose to you as we kick off this second week in May is this: When do you think DVDs are going to pass the 50% mark in terms of market share -- the guys at NetFlix, in a presentation they gave last March during our Hollywood Summit, pegged the date as 2003 -- and, perhaps more significantly, when are DVDs going to pass the 50% mark in your store?

If you're pushing the envelope, tell me why. If you're lagging, I'd like to hear from you as well. Edited responses will be published in this column one day later this week.

Have a great week!

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