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GUEST COMMENTARY: Retailers Too Reliant on Feature Films

12 Jun, 2006 By: Paul Culberg

Paul Culberg

The DVD is the most ubiquitous home entertainment vehicle the world has ever seen. Retailers refer to their purchasing staffs as MOVIE-buyers and their departments as “The Movie Department.”

When research suggests declining activity on the rental and sales front, the blame falls on movies. Though that seems unfair, it is true; for the dominant retailers do, in fact, display a prevalence of feature-film products.

The speculation on the causes are vast and, depending on the source, self-serving. The blame falls on bad movies that cost too much to produce and market, and which are shipped in great quantities, leading to large returns that have resulted in opportunistic liquidation of accumulated inventories at very low prices. That leads to negative consumer perception and the devaluation of film. This may have stemmed the decline in unit sales but not the decline of dollar volume or margin.

Moreover, it establishes a permanent consumer expectation. This now recalls the issues of the mid-1990s when we debated the “breadth and depth” arguments that ultimately were constrained by the availability of physical shelf space. We now see the evolution of unlimited shelf space, made possible by the Internet and the pioneer e-tailers that have created the ability to display every title available and thereby extend the life of products that seemed to have little life left. They also have provided an alternative to the brick-and-mortar stores that continue to clog their shelves with the obvious and the worn old products that have been their offerings for years. The only thing that changes on the shelf, apart from the new releases that often seem to be the same movie in different packaging, is the price of the rehashed catalog.

Perhaps this is really a carefully thought-out strategy to condition the consumer to a price that easily will transition to low single-use electronic delivery.

Niche used to be the way to define products that have had no theatrical or TV exposure. Those products have been denied shelf space and thought of as bad investments (low-turn rentals). There are more vehicles and ways to reach an audience than ever before, and there are more marketers that understand and take advantage of the failings of the mainstream to satisfy a consumer that spends more time online than watching TV or visiting a movie theater. Invention is driven by need, and curiosity satisfies desire.

The result, it seems, is that the consumer's interests are better-served by the alternative than the traditional outlet and by the creativity of those who have been locked out of the physical shelf.

The consumer now has the ability easily satisfy his own desire and curiosity without leaving the comfort of home. The video industry is the result of the innovative, and in its maturity it is being reinvigorated by need and innovation. If we are all lucky and retailers think about customer retention, the consumer might just see the broader selection he desires, and hard bricks and mortar may actually survive and experience true growth.

Paul Culberg is the COO of Goldhil Entertainment.

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