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TOP 100: Canada

17 Apr, 2003 By: Jessica Wolf

In a year marked by DVD growth mirroring the United States', a majority of Canada's top 10 video specialists enjoyed store growth and increased revenue.

Chains that downsized a bit, like Jumbo Video and VHQ Entertainment, maintained or increased revenue, while U.S. companies that have migrated northward in the past two years, like Best Buy and Movie Gallery, gained an even stronger foothold in the country's healthy video market.

Chuck van der Lee, president of Rogers Video, No. 2 in Canada behind Blockbuster, said video concepts and programs are just as current in Canada as they are in the United States. By the end of 2002, Canada's DVD hardware penetration level stood at 40 percent, he said, on a par with America.

Rogers Video, owned by Canadian cable behemoth Rogers Communications, continues to expand by about 20 stores each year, van der Lee said, and has locations throughout the country's provinces, with the exception of Quebec, where competition from Le Superclub Videotron looms large. But van der Lee said Rogers hopes to invade even that territory this year.

For everyone in the retail business, there is the ever-broadening appeal of DVD, said van der Lee, who also serves as chairman of the Retail Council of Canada. Rogers Video is participating in VHS and DVD revenue-sharing programs with four major studios.

“DVD has been wonderful in terms of the kind of growth we've seen, primarily because VHS hasn't fallen off. Unlike our friends in yellow and blue, we didn't completely deplete our VHS inventory,” van der Lee said. While Blockbuster increasingly focuses on sellthrough, van der Lee continues to push hard for rental, which in 2002 accounted for 70 percent of total revenue. VHS was the leader for much of the year, although by the end of 2002, DVD reached 50 percent.

DVD accounted for at least 75 percent of Rogers' sellthrough video business by the end of 2002, van der Lee said.

He said first-week price wars among mass merchants -- and, in Canada, grocers like Safeway and Loblaw that have a strong DVD presence -- is an issue, but Rogers competes with its previously viewed DVD sales offering titles as early as three weeks after release.

“So while Wal-Mart is flogging My Big Fat Greek Wedding at sellthrough, within 21 days or 28 days we have the same product at half the price -- previously viewed, but shrink-wrapped and good as new,” van der Lee said.

Indeed, used-DVD sales account for 8 percent of Rogers' business, or about one-third of its total sellthrough proceeds.

Video games also figure prominently in Rogers' business plan, although the focus there, too, is rentals, buffered by sales of used games.
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To read about the Top Mass Merchants and Club Stores, click here.

To read about the Top International Video Dealers, click here.

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