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How Much Does Rental Hurt Sellthrough? Ask Europe

21 May, 2010 By: Stephanie Prange

I find it interesting that European disc sales (Blu-ray and DVD) are up 2.3% in the first quarter of the year, according to DEGE: The Digital Entertainment Group Europe, while in the United States sales were down 11% in Q1, according to DEG: The Digital Entertainment Group.

That can mean only one thing: Disc rentals are a drag on sellthrough in the United States. European’s aren’t subject to the same First Sale Doctrine that had allowed (up until 28-day window agreements with Redbox and Netflix) rental stores in the United States to rent titles at the same time they are available at sellthrough.

Obviously, consumers in the United States are turning to $1 Redbox rentals and cheap subscriptions at Netflix to fill their need for movie entertainment — otherwise, disc sales in the United States, as they were in Europe, would also be up.

The European numbers make the U.S. market more clear. Consumers are renting (at extremely low prices) instead of buying because they can. Without a robust rental market, Europeans turned to buying discs more often.

There’s a method to the rental window madness in the United States. Studios are merely asking consumers to pay more, as they do in Europe, to see high-quality releases. The evidence for the U.S. studio move is in the numbers.

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