Video Software Dealers Associationís Stark Realities ñ Survival Of The Independent Home Video Store
The home video landscape dramatically felt the impact of the growing retail consolidation in the industry. Opening last Thursday, less than 400 people attended the 9:00 a.m. business session of the Video Software Dealers Association (VSDA) 18th annual convention. The association convened at the Los Angeles Convention center, which was setup for about 2,000 attendees in the hall where the general sessions took place. The extremely poor turnout was not much better at Fridayís business meeting in which film historian Leonard Maltin hosted a panel of Hollywood directors on the subject of ""DVD And The Filmmaker."" At Thursdayís opening business session, VSDA President Crossan ""Bo"" Andersen delivered a conservative, back-to-business message urging ""studios and retailers to focus on business as business."" Stressing that this was ""a challenging time"" for the industry and the association, Andersen said the task of rebuilding VSDA would be accomplished by recognizing changes in business models and developing research and marketing programs that directly benefit its base of independent video store owners, which comprise the vast majority of its members. While not specifically addressed, ""sweatheart deals"" between studios and the major home video chains were blamed for the poor state of affairs challenging VSDA. Andersen said, ""Itís not just at the convention where ranks have thinned,"" the stark reality is that the role of retailers in our industry and the VSDAís membership roles are both smaller today than they were a year ago."" During one panel discussion at the Thursday session retailer Rich Thorward addressed retailer unrest when he declared, ""Some powerful forces joined together to almost kill the goose that laid the golden egg, the independent retailer."" Thorward urged the last of the independents to join his videoretailer.com buying group if they wanted to compete with the major chains with their ""sweetheart deals."" Thorward called for all independent retailers, buying groups and distributors to create ""one 800-pound gorilla"" representing thousands of retailers. But the response was less than welcoming from the other buying group representatives present on the opening session panel on buying options. During it all, retailers squirmed in their seats and at the conclusion of the panel on buying options, Greg Gaekle of Seminole Video in Seminole, Alaska said, ""You spent 40 minutes giving us your sales pitch, gave us five minutes to ask questions and spent 10 more minutes wrapping things up. I donít know what good that does us."" Another poorly attended strategy session on defensive retailing discussed means of helping independent retailers compete against Blockbuster Video, Hollywood Video and other encroaching public chains such as Wal-Mart and Kmart and the Internet. There was no doubt that the energy at the opening business session was touted in pessimision. At the confab, VSDAís 1999 Annual Home Video Industry Report was issued but not publicly addressed. The report confirms the greatest retailer shakeout in the history of the home video industry. Despite the fact that consumers spent more than ever on video rentals and sell-through in 1998, fewer retailers benefited from the $17 billion in video commerce. Direct revenue sharing between the six major Hollywood studios and the nationís top video specialty chains is clearly responsible for the shakeout. With such an encompassing push by majors and now Internet e-commerce video stores, which are willing to sell below cost and operate long term at substantial losses, most independent retailers do not believe that they will be able to compete successfully on home video sales alone, and as a result, have turned increasingly to a balance of adult video product in their stores to survive. That is the last area which has not been impacted by the majors, who have thus far stayed away from offering adult faire to their customers. DVD And The Filmmaker DVD was hardly a topic at the convention, though on the show floor DVD was practically the event, with virtually every video distributor exhibiting or announcing plans to introduce DVD titles. At Fridayís session on ""DVD And The Filmmaker,"" while poorly attended, the directors were able to connect with the audience as they addressed the important supplemental features and ""anamorphic widescreen"" that they would like to see as part of their movies released on DVD. The directors on the panel were Robert Altman (""Nashville,"" ""The Player""), Bill Condon (""Gods And Monsters""), Eric Darnell (""Antz"") Werner Herzog (""Fitzcarraldo"") and Brett Ratner (""Rush Hour""). Their unanimous endorsement of anamorphic widescreen DVD was enthusiastically applauded. The DVD Video Group released Consumer Electronics Manufacturers Association (CEMA) figures accounting for more than 1.1 million DVD-Video players that were shipped to retailers through the first half of the year. While DVD seems to be the hot ticket, surprisingly, little formal attention was paid to the fledging format, which thus far has not been widely adopted by the associationís independent retailers.