Warner's 'Polar' Pricing Aimed at Goosing Margins25 Aug, 2005 By: Thomas K. Arnold
Warner Home Video has announced it will release the holiday theatrical hit The Polar Express in two DVD configurations Nov. 22: a single disc with the movie only and a two-disc special edition filled with extras.
There's only a dollar difference in the suggested retail price: the single-disc version lists for $28.98, while the double-disc special edition is priced at $29.95. But Warner Home Video president Jim Cardwell said this strategy lets retailers “hold on to their margins” by blowing out one version to remain competitive while charging close to list on the second.
The big mass merchants, like Wal-Mart and Target Corp., typically sell new theatricals for less than $15 their first week out. That's several dollars below their wholesale cost, but they use DVDs as loss leaders to drive traffic into their stores.
Having a two-disc special edition available for just pennies more, wholesale, gives them a chance to make up for any losses they may incur, since the wealth of extras justifies a higher markup.
Warner recently used a similar strategy on Constantine, packaging the movie with gobs of extras, as well as a comic book, at a suggested retail price just $2 higher than the regular DVD.