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Wal-Mart, Big Blue Biggest Studio Customers

15 May, 2001 By: Seth Goldstein

Sellthrough king Wal-Mart writes the biggest check to Hollywood, according to a recent analysis by Alexander & Associates. Last year, the bill topped $1.9 billion, says the New York-based research firm.

Blockbuster Inc., which dominates rental, wasn’t far behind at $1.7 billion. Combined, the two retail behemoths sent $3.6 billion to the studios, says Alexander in a nine-page memorandum addressed to Blockbuster chairman and c.e.o. John Antioco but sent to key vendors as well.

Alexander’s Wal-Mart computations are the more intriguing because the mass merchant rarely comments on its video business and never in this detail. The memo estimates Wal-Mart has cornered a 28% share of the sellthrough market.

VHS accounts for 33% and, since Wal-Mart got off to a slow start, DVD no more than 28%. Its customers bought $2.63 billion worth of both formats in 2000 of a total of $9.45 billion, Alexander figures. Movies brought in 85% of sales, or $2.24 billion, and non-studio, non-theatrical titles the remaining 15%, about $390 million.

Wal-Mart’s slender margins suggest the chain only keeps 15% of what’s in the till, says Alexander, which calculates Hollywood’s most recent share at $1.9 billion.

Sellthrough for Blockbuster takes a back seat to rental but still accounted for 8% of last year’s total consumer purchases of $9.4 billion, or $752 million. Big Blue spent $360 million on tapes and DVDs for sale and another $1 billion to satisfy its rental needs in the United States. International operations required $340 million for an outlay of $1.7 billion.

Warner came out on top of VHS and DVD rentals last year, holding a 25% share, Alexander says. Buena Vista garnered 19.5%; Universal, including Dreamworks, 18.5%; Paramount, 12%; Columbia TriStar, 11%; 20th Century Fox, 8%; and all others, including Artisan, 6%.

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