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ESCA Panel: Studios Need Better Data from Retailers

28 Jun, 2007 By: Chris Tribbey

Gauging the potential success of a DVD title at launch is like trying to forecast what an iceberg looks like by just looking at the tip, according to Dan Miron, SVP of sales and operations for Warner Home Video.

The comment came during a panel June 27 at the Entertainment Supply Chain Academy Conference in Century City, Calif.

Judging what works at retail may be easy for studios after the fact — if a DVD sells and there are few or no returns, it must be a success.

But figuring out what works beforehand can be a lot trickier, and is more important, studio executives agreed.

“The quality of the data has gotten a lot better,” Miron said, of the sales and consumer habit information his studio receives from retailers. “Once you have that data, you can develop processes and systems to react.”

But, he added, his studio and others want “more data from more retailers.”

For a new title, Warner Home Video is trying to forecast a DVD's performance for several days out, and by the hour. “We're trying to forecast consumer behavior, which is inaccurate at best,” Miron said.

“Every title acts completely different,” said Tom Emrey, SVP and COO for Universal Studios Home Entertainment. For many new releases, store shelves need to be replenished by mid-morning on the street date, he said.

“We've built this visual entertainment industry into an enviable $33 billion a year industry,” said Mark Fisher, VP of membership for the Entertainment Merchants Association. But according to a study out of the Sam. W. Walton College of Business, $330 million in potential sales is lost due to out-of-stock issues at the retail level.

When DVD first came on the scene a decade ago, the business model was based on how the studios treated VHS rentals, Miron said, and replenishing store shelves took 3-4 weeks. Now DVD is mainly a sellthrough business, and if it takes longer than 24 hours to fill the shelves again, it's too long, he said.

“[Quicker restocking] comes through better planning with our retail partners and better understanding of the consumer,” Miron said.

Better forecasting can help studios put the right assortment of product out there, and in the right places, Emrey added. “When we place a piece of product in a certain location in your store, how does it do?” said Vic Hernandez, EVP of Mosaic, a field sales and marketing company. “Studios need to know.”

Also, there's less room for mistakes with shelf space at a premium. “Everything you do has little room for error,” Miron said. “You have to be more surgical with your approach.”

Promotions are key for a new title, everyone agreed, and doing it fast is as important as doing it right.

“Ten days after a release date, it's old news,” said Aodan Coburn, EVP of worldwide operations for Sony Pictures Home Entertainment. “We really have to optimize that [launch] window.”

“In the old days we would have had a cookie cutter approach. It was either a success or not a success,” he added.

Due to the current state of the industry, with studio executives expecting to finish flat or just slight up or down over last year, Miron said studios need to do their best to limit returns.

“What we're being asked to return by the retailer and what we're authorized to return by the studio often creates a gap,” said Vic Hernandez, EVP of Mosaic, a field sales and marketing company.

But studios have made great strides in forecasting how much to ship to retail ahead of time. “It's a huge advance from the early days of DVD,” said Bill Segil, SVP of worldwide operations for Buena Vista Home Entertainment.

But that doesn't mean returns are a thing of the past.

“Returns are like death and taxes,” said Alasdair Ogilvie, group operations director for the British content provider 2Entertainment.

“They'll always be with us.”

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