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VSDA Show: Disc Damage Blues

30 Jul, 2003 By: Judith M., Stephanie P.

Disc damage costs U.S. rentailers a collective $50 million each year, factoring in repairs and the cost of make-up goods to customers, according to a Video Store Magazine study.

“Our business doubled between 2001 and 2003,” said Jonathan Baskin, VP of marketing of Digital Innovations, which supplies the Skip Dr., one of several disc repair lines exhibiting at the show. Digital Solutions' patented technology has very high customer satisfaction, he said. “Since 1999, we've sold about 3 million devices worldwide.

“Discs are a great storage medium but they are not impervious to scratches,” Baskin said.

A telephone survey of 225 independent retailers conducted in June 2003 revealed that the frequency of disc damage is on the rise as DVD becomes the dominant rental format.

Most rental dealers surveyed -- 54 percent -- said damage to rental inventory is more of a problem with DVD than with VHS. Only 21 percent said damage was less with the digital format, while one-quarter reported no difference in the frequency of damages.

These results contrast with a study conducted in July 2001 when DVD penetration was less than 25 percent and the DVD comprised only 12 percent of weekly rentals. That study showed 42 percent of retailers thought DVDs experienced less damage than VHS; one-quarter thought damage was the same; and 35 percent thought discs were more hardy than cassette. The new results may indicate that no longer is the software just in the hands of the technophiles who handle it with loving care; DVDs are in the hands of the mainstream viewer, including families with kids.

Set-top players are now in more than 50 million households. Factor in other DVD playback devices like game platforms and personal computers, and there are more than 100 million DVD devices available to U.S. consumers.

DVD now accounts for more than half of all rental transactions, and rentailers' inventory mixes continue to expand in favor of DVD.

The average retailer spends $1,845 per year repairing discs or making good for disc damage.

As DVD inventory size increases, so does the cost of damage. Locations with less than 1,000 DVD units in their inventory mix say disc damage costs them $1,143 per year. Those with 1,000 to 2,000 units average $1,891 per year, and those with 3,000 units average almost $3,000 per year.

Interestingly, while outlets with larger DVD inventories have higher costs associated with disc damage, the average cost-per-disc decreases. These findings suggest that retailers become increasingly efficient in handling disc damage.

On average, those with less than 1,000 units in inventory spend 29 cents per disc. Damage per disc drops to 11 cents when DVD inventory is 1,000 to 3,000 discs. Rentailers with more than 3,000 discs spend only 5 cents per disc on average.Rentailers with the smallest inventories are most likely to discard a disc, with 23 percent surveyed reporting this is how they usually handle damaged inventory. As inventory size increases, almost two-thirds of the rentailers said they repair discs on site.

Retailers prefer to offer free rentals to make up for a damaged disc. When customers return damaged rental product, 60 percent of retailers say they provide the customer with a make-good rental or refund.

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