Our Two Sellthrough Businesses

22 Nov, 2011 By: Thomas K. Arnold

Last year’s Black Friday was a Roman candle of joy for Hollywood studio executives — bright, but short-lived. If you will remember, Blu-ray Disc and DVD sales soared dramatically the day after Thanksgiving, and everyone’s initial reaction was that the industry was finally on the verge of recovery. But by the time the holiday weekend was over, sales were back down to previous levels, and subsequent analysis revealed the boost was due primarily due to deep discounting — not just of hits, not just of in-demand catalog special editions, but of everything.

I’m hoping this year’s Black Friday will bring better news. What all of Hollywood is hoping for, of course, is that consumers will step up their disc purchases not because prices are so low that they can buy a movie for just a little more than they can rent one, but because they’re getting excited again about owning and collecting movies.

Granted, this may be a little too much to ask for, given the fact that the novelty of buying movies on shiny little five-inch discs has worn off and there are so many other home entertainment options available. But it certainly is a worthy goal for which to strive, and underscores the drive for “added value” studio marketers have been mouthing almost from the day the disc business was born.

So how do we get consumers excited? If I had the answer, I’d be up in Hollywood right now, proclaiming myself the new Warren Lieberfarb. But I do have a few hunches, beginning with the notion that the sellthrough business is actually two different businesses, with two very different audiences.

The first is the new-release business. These consumers tend to act on impulse; they want what’s new, and they want it now. If they see it first in the Redbox machine, great, they’ll rent it; if they spot it first inside Walmart or Target, they’ll buy it. The key here is to maintain the window from rental — although I’d let physical rental stores get new releases on day one, since they generally sell videos too — and at the same time boost advertising, both traditional and viral, stressing not just the movie but the value of ownership. To pay for the extra advertising, I’d cut back on extras — sorry, folks, but for new releases, special features just don’t mean that much. To borrow a quote from James Carville: It’s the movie, stupid.

The second sellthrough business is catalog. Here, I’d just take a look at what Jeff Baker and his team are doing at Warner and copy it. Sorry, but that’s about it — Warner takes the proverbial cake when it comes to dressing up old movies, both in terms of extra material, like rare behind-the-scenes footage and documentaries, as well as packaging, with such nifty items as watches, reproductions of actual programs and coffee-table books.

As the Apple iPhone has proven, even in a down economy, people will still spend money. You just have to cater to your audience and, as the song says, keep the customer satisfied.

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About the Author: Thomas K. Arnold