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Video Specialty Leaders Begin to Jettison VHS

22 Apr, 2004 By: Melinda Saccone

Now that DVD has entered its maturation phase and VHS is in its final stages of decline, the top 50 video specialty retailers (see chart, page 26) are giving serious thought to the future of VHS.

With disc transactions accounting for 56 percent of rental revenue and 84 percent of the sellthrough take, it comes as no surprise that retailers are re-thinking the composition of their rental and sales inventory over the next 12 months.

Since the birth of DVD, Video Store Magazine has tracked retailers' opinions on the continued viability of VHS. Surveys have repeatedly shown that video specialty retailers plan to follow the lead of their customers and that, as long as cassettes generate a reasonable demand, VHS will remain on the shelf.

While many video specialty retailers are quick to shy away from committing to abandoning VHS altogether in their stores, it looks as though 2004 may be the year the cassette goes by the wayside.

According to Video Store Magazine Market Research estimates, more than 60 percent of all units shipped into the rental market last year were on disc.

More than one-third of the top 50 video specialty retailers said they plan to do away with VHS in their stores in 2004. That's quite a change from a year ago when not a single top 50 video specialty retailer was willing to commit to abandoning the format.

Even those who are not planning to eliminate cassettes as part of their inventory will make draconian cuts to their cassette library in 2004.

Almost all (92 percent) of the top 50 video specialty retailers said they would decrease their VHS inventory for rent in 2004. More than half will also slice the cassettes that they carry for sale, with 62 percent indicating that they will chop the availability of new cassettes for sale at their outlets.

Meanwhile, all of the top 50 video specialty retailers plan to increase their disc rental inventory in 2004 with 79 percent planning to increase DVDs for sale.

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