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VSDA Show Beats the Biz Slowdown

28 Jul, 2005 By: Thomas A., Kurt I.

As the curtains fell on Home Entertainment 2005, attendees were left with sobering, but not altogether unexpected, news: The DVD business is maturing, growth has slowed to the single digits, but there's no cause for alarm — at least, not yet.

If there was a theme, it was that now's the time to work harder — to come up with more innovative marketing plans, more unique products, and, most important, find niche demographics and cater to them.

Simon Swart, EVP of sales for Twentieth Century Fox Home Entertainment, summed up sentiments when he pronounced at the Home Media Retail Summit, “I don't think the sky is falling, and I don't think we are in trouble.”

Citing internal research, Swart predicted 8 percent annual growth for the next few years, although Tom Adams of Adams Media Research was a bit less optimistic. Adams forecast DVD sales growth of 3 percent this year and said he had to revise significantly more cheery projections he issued at the start of the year because of the relatively weak slate of theatricals.

An informal survey of retailers attending the show found more whose business was down than up. The usually chipper Marc Oringer, owner of New York City's Champagne Video, lamented at the pre-show Lions Gate Entertainment Summit that “business has been terrible” so far this year.

The solution to the slowdown, most everyone agreed, was to work harder — and smarter. Suppliers need to reach out more to potential audiences — such as the Latino and over-45 adult markets — and at the same time realize they may need to exercise more caution in setting sales goals and issuing projections.

Video specialists, in turn, were pressed to make more of a commitment to sellthrough. Analyst Adams noted that Blockbuster only has an 8 percent share of the sellthrough market “and has been cutting back.” That's a marked difference from other industries, such as the book and game businesses, where specialists control about 50 percent and 40 of their respective markets.

Indies who gripe that they can't compete against mass merchants on the hits were advised to analyze their markets and identify opportunities. At the summit, panelist Gord Lacey of the Web site TVShowsOnDVD.com noted, “TV DVD has become so big, and yet where are the TV DVD specialty stores?”

The show itself drew high marks.

“I find the Bellagio much more attractive than the Venetian,” said Rick Timmermans of Tower Records and Video. Timmermans said he and his team met with most of the majors the first day of the show and others later.

“We got quite a lot of business done,” he said.

Jerry Ropelato, president of Utah-based Top Ten Reviews, an Internet retailer, said he felt the one-on-one meetings were conducive to business. “We have worked some deals here that will more than cover the cost of the trip,” Ropelato said. His one request was that the show have more seminars.

Another online retailer, Donald Wyatt of Travel Video Store.com, said this year's visit to the show — his first ever — “brought to us a lot of titles we wouldn't have been able to find before.” He noted the elevators were fast, efficient and rarely overcrowded — a marked contrast to what retailers were saying in years past at the Venetian.

Exhibitors seemed pleased with the swank Bellagio locale. Some 241 exhibitors, an increase of 29 percent from last year, participated in the show. The location change from the Venetian was necessary, said Mike Haney, VP of Sundance Channel Home Entertainment.

“I'm a big proponent of changing the location every couple of years,” he said. Haney also attributed a re-energized atmosphere to the fact that all the major studios showed up this year, for the first time since 2001.

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