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TK's MORNING BUZZ: With DVD Eating Bigger and Bigger Portions of the Rental Pie, the Absurdity of Goals Is Hitting New Heights

1 May, 2001 By: Thomas K. Arnold

Here's another reason for studios to rethink their complex copy-depth programs and goal structures: It's a fair bet that most retailers will tell you that VHS rentals are falling at a steady rate, including Blockbuster, which earlier this year reported VHS rentals are down 10% to 15% from last year.

And yet goals are based on past buys of titles that streeted six, eight, even 10 months ago, and thus reflect market conditions that are already out of date.

That's why I believe the time has come for either flat unit pricing or allowing retailers to mix DVDs into their copy-depth and revenue-sharing programs, which some studios are already doing.

I should point out that from day one, I've always found it a bit absurd that studios should dictate how many copies of a certain video retailers should buy. After all, they're not behind the counter. They don't do the books, and they don't check inventory levels to see what moves and what doesn't.

Now, with DVD eating bigger and bigger portions of the rental pie, this absurdity is hitting new heights. Goals are based on year-ago buys that in more and more cases simply are no longer relevant. No wonder so many retailers buy sideways -- it's the only way they can make these programs work for them.

Letting dealers substitute DVDs for cassettes is sensible, logical and fair. Hopefully, that won't stand in the way of Hollywood doing the right thing.

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

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