Winter Olympics Freeze Out Rentals22 Feb, 2002 By: Thomas K. Arnold
The Olympics aren't a winner for the nation's video retailers.
The winter games in Salt Lake City are drawing huge television crowds, to the detriment of home video consumption. And a slow video release schedule isn't helping matters.
Nationwide, consumer spending on VHS and DVD rentals fell to its lowest level so far this year during the first week of the Olympics (see story, page 27).
Mick Blanken, owner of SuperHitz Video in Delaware, Ohio, said rental activity has been down about 10 percent since the games began Feb. 8.
Steven Scavelli, president of Brooklyn, N.Y.-based Flash Distributors, said "the Olympics have definitely reduced traffic in most of our [client] stores, but not as much as some anticipated." Hardest hit, he said, are weekdays, "when it seems consumers are more easily satisfied watching the Olympics as opposed to going out and renting or buying a movie."
Michael Becker, owner of The Video Room, says the Olympics have had a decided "negative impact" on business at his New York City store, "especially over the weekends—this year more than I can remember in Olympic years past."
Victor Fuentes, senior director of video, video games and computer software at Hastings Entertainment, also reported a "negative impact" on rentals at the Amarillo, Texas-based chain's 143 stores.
"The times during the opening ceremonies and the first weekend were the hardest hit," Fuentes said.
The opening ceremonies on NBC garnered a 25.2 ratings share, equivalent to nearly 26.5 million U.S. households—an Olympic record. Overall, the ratings for the first 10 days of the games were 24 percent higher than for the first 10 days of the 2000 Sydney Summer Games on NBC and 10 percent above the 1998 Nagano Winter Games on CBS.
Viewership is up, according to media analysts, for several reasons. The games are taking place on U.S. soil. American contenders have been more successful than at past games, taking home more than two dozen medals so far. Several "extreme sports" popular with younger viewers have been added, including snowboarding and skeleton sledding.
Ratings among viewers between the ages of 18 and 34 are 17 percent higher than for the Nagano games and 20 percent higher than for Sydney, according to NBC.
And then there was the "Skategate" scandal involving an alleged vote-rigging in the pair skating category.
Hasting's Fuentes blames other factors besides the Olympics on contributing to the slide in business. "Another issue is the lack of titles available due to the studios shifting releases into March and April," he said. "It's obvious theatrical didn't shy away from releasing several hits over this past holiday weekend. It seems we would have seen stronger rentals had they followed the same course and had some hits coming out on VHS and DVD."
Fuentes' boss, Hastings president and CEO John Marmaduke, agrees. "This two-week period would have been a perfect time to release some under-$50 million box office movies, as they would have had the new release wall to themselves," Marmaduke said. "As Fast and Furious proved, the first quarter is underutilized by video marketing departments."
Joe Pagano, senior VP of enterprise entertainment for Best Buy, shares those sentiments.
"The studios appear to be avoiding dropping releases during the Olympics period to avoid any conflict with the games," he said. "So there probably has been a shift in consumer viewing from what would have been home video to watching the Olympics."
Most retailers surveyed said they aren't doing any counter-programming.
"I think we'll just ride this out," Becker said. "My feeling is that we're not going to convince someone who is set on watching the Olympics to change their mind with a ‘deal'."
Fuentes disagrees. "We have promotions in our stores that tie in directly with the Olympics that include books, music, video, computer software and related tie-in products for sale," he said.
On the rental end, recent movie releases are being offered at reduced rental rates.
"We also have a themed promotion that ties in ‘gamers' with ‘X games'-type rental titles," Fuentes said.
Some retailers are weathering the storm better than most.
"I haven't felt much damage from the Olympics," said Herman Junkerman, owner of Movie Man Video & Tan in Glassboro, N.J. "We are more affected by the nice weather here on the East Coast."
"Being in the Deep South, the Winter Olympics do not affect my business as much as the Summer Olympics do," said Steve Disney of Screenplay Video in Atlanta. "Even though Atlanta has a lot of northern transients, there is just not a lot of interest in the events other than the big ones, like women's ice skating and hockey.
"There are not a lot of luger or curling enthusiasts in this area. Now, if they had college football or backyard barbecuing on, that would be a different story."