TV DVD: Not Just For Sellthrough1 Oct, 2004 By: Thomas K. Arnold
At a recent conference in Hollywood on the state of DVD retailing, Ted Sarandos, chief content officer for Netflix, made a point of correcting a common misconception. TV DVD, which revolves around pricey boxed sets of entire seasons or even series, is not just a boon for sellthrough dealers, but also for rental dealers.
“TV DVD accounts for 12 percent of our business and is the fastest-growing part of our business,” Sarandos said.
Ted Innes, of Movie Gallery, nodded his head in agreement. He then told the audience that the Dothan, Ala.-based chain of video rental stores is in the process of adding dedicated TV DVD sections to its “new-release” walls.
It's not just the big guys, either. Scott Poston, manager of Video Station in Boulder, Colo., said his store rents “quite a bit” of TV product. Series or season sets are broken up and rented one disc at a time.
“That keeps them coming back,” Poston said.
None of this comes as a surprise to studio executives, who amid the TV DVD sales boom has been encouraging rental dealers to share in the spoils.
“There is a misconception that TV DVD is only for sellthrough, but in reality it is very viable in the rental channel — and gaining popularity in the rental channel,” said Todd Rowan, VP of marketing for 20th Century Fox Home Entertainment.
For the past two years, Rowan said, Fox has been creating special “rental-friendly” packaging for popular TV DVD sets, beginning with 24 — Season One. While the regular package came with all six discs in a fold-out box, the rental edition had each disc packaged in its own Amaray case, so retailers could rent them individually, one at a time.
“From a retailer perspective, that really worked,” Rowan said. “24 — Season One has been our best-renting TV title.”
A similar strategy is in the works at Showtime Entertainment, which has the top-selling TV DVD series “Queer as Folk.”
“We believe the TV DVD rental business is about to explode,” said Tom Sykes, VP of sales at Showtime. “Beginning with the upcoming release of ‘The L Word,' we are going to be creating rental-friendly DVD packages for all our series, including ‘Queer as Folk.' Each DVD collection will consist of individually packed discs, with UPC codes created for each Amaray package.”
Bill Bromiley, SVP of sales and distribution at First Look Home Entertainment, agrees. First Look has just entered the TV DVD market with five themed boxed sets of “Unsolved Mysteries” episodes. In each boxed set, the four discs come in separate plastic cases. He said First Look marketers “purposely created dual-purpose packaging in order to push rental as well as sales. Individual UPC codes are included on each of the four discs per boxed set, so each disc can be rented individually. And the box itself has a separate UPC code for sales.”
Video Store Magazine Market Research shows 71 percent of rental stores with at least 10,000 units of inventory actively rent TV DVD product. On average, TV DVD rentals account for nearly 5 percent of their overall revenue.
“TV DVD is so huge it doesn't surprise me at all that rental dealers have figured out a way to get their piece of the pie,” said Amy Jo Smith, executive director of DEG: The Digital Entertainment Group. “There's also an interesting element in wanting to have a taste of the show.”