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DVD SAVANT

The Wolf at the Door

Something big is coming and it's not pretty. And it explains why the BIG films haven't yet come out. Read it and weep, DVD fans. READER RESPONSES FOLLOW

An editorial by Steve Daily at the DVD Insider Page opened my eyes today to a simple truth that makes very logical sense out of a lot of previously undigested opinion about the growth of DVD.

Savant reads the other DVD columns from time to time and nobody's discussing it much. Maybe they're too happy living in a world where all the new DVD titles are an email away via web-based shopping. Is everyone in denial? It looks like the rules of the game are about to change!

What the article discusses is the inevitable adoption by the studio-providers of top-end DVDs, of the rental model of distribution. With Blockbuster's wholesale advent into DVD rental at most of its outlets, the signs are upon us that studios will soon be pricing DVDs on the double-tier basis familiar from VHS tapes: New studio releases, the kind everyone wants to see right away, will be priced as rentals, at a multiple of the cost of a library, or sell-thru disc.

In the VHS world, studios began double-tier pricing their hot new films as a way of making money on the rentals by video stores. It's a system that many have complained about, especially small independent video outlets who can't afford to stock deep on every new title. The practice helped Blockbuster too as it gave them an edge that allowed them to steamroll the competition wherever they went.

Typically, a top VHS title surfaces as a rental, with a price upwards of $60 and sometimes as high as $125. For one VHS prerecord. Naturally sales to consumers stay low, but demand at the rental counter goes even higher, and the studios get what they want: immediate and dramatic cashflow. Blockbuster being such a big gorilla, it can cut sweetehart deals with the studios and actually get the rental tapes at discount prices, dashing the hopes of any small competitor who thinks he can find a place in the market.

Then, a few months later, the title is reissued as a sell-thru intended for consumer purchase, priced back down in the $15 to $25 level. With a really big title, this might involve an entire new ad campaign. Also, the cassette would now probably have fewer of the promo ads taking up space before the movie on the rental release (these are the promos Savant made a living cutting for a number of years).

Whether to release a certain title rental or sell-thru is the main business of Home Video Marketers and execs, who spend a lot of their time analyzing each title and the competition it would likely face in the marketplace. Smart maneuvering can mean the difference of millions of dollars. Dear DVD fan, these are the issues that occupy hearts and minds in Home Video companies, not aspect ratios or faithfulness to a 'director's vision.'

If rental pricing is coming to DVD, then it explains quite handily a number of oft-debated DVD issues. Paramount and Fox and Steven Spielberg and George Lucas aren't waiting for X number of DVD players to be sold to start releasing their biggest films. They're waiting for the player base to get large enough to justify the recreation of the VHS rental model, for DVD. The astronomical sales figures for The Matrix are telling all that the time has come; the studios want that big killing right up front, the massive headline-making sales bonanza that competes with theatrical boxoffice for attention.

And Blockbuster wants it too. It wants to pay Paramount a premium for Indiana Jones and the Raiders of the Lost Arc (sic). Why? With the mom & pop video stores no longer a threat, Blockbuster has a new foe to conquer - the online discount sellers, who now can offer top titles at outrageous discounts barely more than the cost of a rental. This is why mssrs Spielberg and Lucas aren't rushing out with DVDs of Star Wars and E.T.; it's because they don't want to give them away.

So get ready, I think it's coming ...the fans of older 'library' titles may not be affected, but expect to wait as much a year after rental release for sell-thru releases of many of your faves. Something to think about: many letters Savant received at MGM complained about the VHS release of Gone With the Wind, which, after six or seven years, still was available only at a rental price - $90. GWTW was probably a special case, a solid seller that a set number of fans (and libraries) felt they had to buy. The price stayed high because they marketers knew lowering it would not sell a compensatory higher number of units. The title stayed popular, and desirable, because there were not a zillion copies of it floating around at any given time.

Savant invites discussion and reaction to this, which will be published here as soon as it arrives. I consider myself a film historian and video fan, not a business expert, so if there are angles to this boondoggle I haven't considered, or if (it's happened before) I'm just plain wrong in my business thinking, well, let the hilarity begin and I'll laugh too.

Just remember the Nickelodeon pioneers at the turn of the century and the reasoning they gave for abandoning flourishing jobs in haberdashery and junk sales. They attended Nickelodeon screenings and found the perfect business opportunity ... guys on Main Street were making money selling NOTHING, just letting the eager audiences LOOK at the goods, in this case, an image on a screen. Home Video complicates this 'make money while you sleep' miracle, by giving the audience the film, sort of. But it's a constant war between producers and sellers and renters and leasers. What studio would opt to sell you their goods when they can rent them to you?

Sweet dreams. Bwah ha ha ha ha ha hah!

READER RESPONSES -

10/11/99

First off, thanks loads, bud! Your lbxing article won me $20! I THOUGHT I remembered watching Sean Connery tumble into the ravine in slo-mo from the theatrical of "Man Who Would Be King" and was/am mystified why "they" left it off the DVD. Not an inexpensive shot. The "making of" featurette more than made up for that omission, tho. Thanx also for confirming that there is a stereo track to "Yojimbo" out there, saw it that way in Japan once but never this side of the pond. Good job taking Criterion down a peg, they get so self-righteous sometimes I wanna hurl. As far as rental pricing by the studios goes--piss on 'em, as Judge Roy Bean said so eloquently. I've got most of Lucas/Spielberg on LD and I'm happy with that. Anyone who's surprised at this just isn't paying attention. That old adage about "if it seems too good to be true, it probably is" finally kicketh in, DVD owners have been living in Cloud Cuckoo Land for quite awhile. I wonder, though, if the studios can re-insert the toothpaste into the tube as easily as all that. If they start double-pricing reissues now--that'll be a major hurt. Keep it up! - JK


Just finished reading your article on the future of DVDs priced for rental. I agree with a lot of what you said. Obviously, the age of DVDs priced for rental is coming, but I think two poionts need to be stressed a little more than you have.

1: OK, I could just be naive, this could just be wishful thinking. But when you're talking about catalog titles, even the big guns, like Star Wars, the Indy trilogy, the Godfathers etc., the studios already know that there is enough demand for these titles to warrant a release priced for sell-through. I would think that if the DVD releases for these anticipated movies was at a price fit for rental, you'd have a lot of people merely waiting for the eventual priced for sell-through release. These are keepers, not rentals, and when you consider that roughly 90% of all VHS rentals are new releases, it seems a big risk NOT to do these titles sell-through.

2: As you pointed out with VHS sales of GWTW, there are certain titles that just don't sell all that well, no matter if they are exonerated as classics or reviled as schlock. These titles, when on DVD, will have to be priced-for-rental, because the studios know that's the only way they'll ever generate a decent profit. I can't picture anyone demanding on DVD anything from the Corey Haim ouevre (sp?), even at a $10 or $15 sell-through price, but they might be willing to shell out $2 or $3 for a rental. I fully expect these titles to be priced for rental; in fact, I don't think I'd want them cluttering up my local Suncoast.

And as a coda, let's not forget that this is still a relatively new technology (what is it, 3 years old, from a consumer standpoint?). As more and more titles are available on DVD, the demand for the big guns will (somewhat) abate. You can even see it on various forums, various people saying something along the lines of "Now that I have the Matrix & The Mummy, I can wait for Star Wars." DVD players are now in the $200 range; it's success will not hinge on Spielberg or Lucas or even Disney at this point, in my opinion. They can help make it succeed, but it will succeed nonetheless. DVDs priced for rental will come to pass, but big titles that will sell millions of copies right out of the gate will still be sold priced-to-own right off the bat, and certain titles few people will ever want to own will be the hardest to get ouf the priced-for-rental quagmire. Thanks for your time, - John Manigrasso


10/12/99

Just read your article on rent prices, which has been at the back of my mind. But while I've been buying titles left and right (after coupons on-line 5-10 bucks for new releases!) I'm reminded of when CD's first came out. I seem to remember reading articles about how the (gasp!) 10-12 bucks per album seemed high, but once the players get into the market the prices would start to come down. Now we pay 15 - 18 at Best Buy!!? No one is looking out for our pocketbooks beyond seeing how much more quickly they can empty it. mike pisaneschi


10/13/99

Dear Savant, I read your article yesterday and really got to thinking about it last night. I disagree with the notion that the "BIG" films haven't come out yet. I consider big films to be SPR and Titanic. Both of which are available (or very soon to be) on DVD.

As for Lucas and Spielberg not wanting to give their movies away. Who would they be giving the movies to (the consumer or the rental companies)? Who is going to run out and rent the Star Wars Trilogy on DVD? I own 2 VHS copies. I would think many who own one copy, really own 2, and don't forget about those who have one or two versions on laser disc. I can really only speak for myself when I say that I would not rent the original trilogy on DVD and that I would wait until the DVDs went to sell through pricing. Same goes for the Indy Trilogy (I already own a VHS copy, I don't need to rent the DVD).

I do need to replace my VHS copies with DVDs when they become available but only at a reasonable/sell through price. (according to the VHS rental model).

I don't think the rental model is what Lucas and Spielberg are waiting for. If it is, then I think it won't work very well at least with SW, Indy and E.T.

I do agree that in the near future (in one year's time) we will see the rental model applied to DVDs. Rent first, then sell through pricing later.

I actually don't have a problem with this because maybe then I won't be so impulsive to buy films on DVD that I have never seen.

I do expect that we will see non special editions, your average Disney title, for rent. And when sell through pricing becomes available, we will see new discs with SE content. I think this would be very profitable for everyone. Rent the disc for the movie, buy the disc at a sell through price because of the extras.

I have to be honest, I like things the way they are. Best regards, Raleigh Smith


10/14/99

I read your article on the impending two tier pricing system with great sadness... although it certainly wasn't the first I had heard of it. My only comment concerns your assertion that this is what the holders of the big, missing titles have been holding off for. Does Lucas actually think that rental stores will want to stock 100 copies of a 20 years old film? How many copies of Star Wars or Indiana Jones does your rental store stock now? This depth of stock has typically only been applied to the latest, hottest releases... where I live anyway. If you look a little more closely at that specific issue and figure the rental market will probably NOT bring that kind of depth in but will put only a few copies on the shelves... and weigh it against the numbers the consuming public would probably buy at the right price... I think they lose if that's what they're bargaining for. snolan

Text (c) Copyright 1999 Glenn Erickson





DVD Savant Text © Copyright 2007 Glenn Erickson

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