Home Media Magazine - February 24, 2008 - (Page 36) ADVERTISEMENT PRODUCT SPOTLIGHT THEFT MSRP: $29.95 Liberty Hills was a nice conservative little town until they got done with it! Sweet, sexy Guy and his band of leathermen and bears fight back when the town preacher picks them as the target in an all out war over political and social issues. Order Date: 2/26/08 Street Date: 3/18/08 NEWS Continued from page 12 www.homemediamagazine.com European Suppliers Fighting Piracy on the Internet for years, and we have certainly seen a rapid and big decline in video retail and rental in the past few years.” It is really important, he adds, that the content providers “continue to tell the consumer we have the real thing.” “To me, it is about having a quality entertainment experience,” Brown added. Interestingly, both men note that high-speed Internet in Scandinavia has not resulted in obvious damage to the packaged-media business. “There is tremendous high-speed Internet up there, but yet there is not, we feel, as much piracy,” Brown said. “Maybe it is the government enforcement, maybe it is the culture, but we’ve found our growth up there has been phenomenal, particularly in catalog, particularly in quality special editions. They want the package, and they want the good stuff.” It helps that there is quite a low physical piracy problem, adds Cunningham. “Most of the piracy is Internet-based, which contrasts with the U.K., say, where it is mostly physical. The absence of the physical piracy helps the packaged-media business in the Nordics — if you like the disc, you don’t have as many alternatives there. I think it has to do with the geography of the country, distribution is incredibly expensive there.” Italy also is plagued by piracy, but Brown notes a growing retail base as a good sign for the future. “Local and pan-European retailers are growing in Italy,” he said. “The market has always tended to be focused in the north, but that is now spreading south of Rome. Italians seem to be buying more product, and there’s always been a pretty good rental market there. While there are many similarities, unlike Spain, I think Italy still has some growth in it.” Similarly, Cunningham believes that the Benelux is a market with more growth to come, particularly from catalog sales. Brown, however, notes that the price deflation that had afflicted Belgium has hopped across the border to the Netherlands, where the lowpriced DVD has prospered. and sustain it. The majority of the issues we have in the U.K. market are about retailers loss leading or selling at almost no margin.” Brown stresses that studios cannot affect retail competition but does suggest that they can focus on getting across a message that gets “the consumer to recognize the value when they buy one of our films.” Value, or price, is also something of a defining characteristic of the German market, according to Cunningham. “It is an amazing country for the catalog business,” he said. “The Germans really seem to like a deal. But I think all the studios wrestle with the fact that we don’t sell enough at new release given the size of the population and the general interest in DVD.” Noting that price erosion on catalog means this growth has not really added to revenue, Brown adds that it is important to remember that cultural differences are at play here. “Because it is a Northern European advanced economy, we all assume it is going to behave like the U.K., or Australia or the U.S.,” he said. “But Germans are very specific about what they do with their spare time — much of it is spent outdoors — so we have to continue to convince them that we have a great value proposition.” According to Brown, it is not just in Germany that the studios have to convince consumers that their movies are worth watching. Across the world, movie distributors have to compete with a huge array of other entertainment products used in particular by the younger generation. That means reshaping their content to suit the desire for more flexible consumption, he adds. “All the research says that the generation coming up wants choice, interactivity with the content, and they want portability,” Brown said. “We’re looking at second session or Copy Plus because that is what consumers are telling us that they want, and we will provide it.” There is no doubt in Cunningham’s mind that digital delivery is coming, and fast, but he does not believe that it necessarily spells the end of the packaged-media business. “Is it going to stop people buying DVDs in huge quantities over the next five to 10 years? I don’t think so,” he said. “History shows that every time we give consumers a really creative way to consume the product, not only does the overall pie grow but all the component parts grow as well.” What is going to change, Cunningham said, is the way content owners will have to market their products because mass audience television is no longer an option. “We are working very hard on online at the moment to engage people there,” he said. “What we have to recognize as an industry is the way we reach consumers is fragmenting rapidly and that it changes every year.” Brown agrees and suggests that the studios have also to keep in sight the overall promotion of movies as a value entertainment option. “We have taken for granted over the years that, of course, people are going to buy and watch movies, and we need to promote that more than ever because the competition for leisure time is greater than ever,” he said. Sam Andrews is an editor at Cue Entertainment. CLASSIFIED SHOWCASE BUSINESS SERVICES CO M P U T E R S O F T WA R E CO M P U T E R S O F T WA R E STORE FIXTURES The Value of Packaged Media Price deflation, of course, has been a major issue in the United Kingdom, where Cunningham believes there are signs that attitudes at the retail level are changing. “We’ve been quite encouraged that retail pricing has held up better compared to previous years,” he said. “It looks like a number of retailers are pricing the product at a level that the consumer is prepared to pay for, rather than in that loss-leading way they have done for a while.” It may be, he said, that at last the U.K. business is beginning to accept the findings of some research on consumer attitudes toward price. “The lesson from the research that is clear to me is the consumer is very often prepared to pay more than the retail pricing,” Cunningham said. “And it is clearly true to say that retailers cannot continue to sell at a 50% loss CLASSIFIED ADVERTISING FOR ADDITIONAL INFORMATION CONTACT: Kurt Wohlman (714) 338-6749 kwohlman@questex.com www.homemediamagazine.com USED TAPES & DVDS 36 Home Media Magazine February 24–March 1, 2008 http://www.homemediamagazine.com http://www.corporate.com http://www.rapidrental.com http://www.foresightvideo.com http://www.cwdi.com http://www.homemediamagazine.com
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