Home Media Magazine - September 2-8, 2007 - (Page 20) BUYING GUIDE How the Grinch Stole Christmas HOLIDAY www.homemediamagazine.com Holiday Retail Faces Increased Challenges By Erik Gruenwedel ollowing a sluggish first half due in part to a release slate devoid of theatrical hits, home entertainment retailers are looking to the fourth quarter and specifically the winter holidays to make 2007 a year to celebrate. They are not alone. Overall, retailers typically account for 50% of annual sales and profits during November and December, according to published reports. This year could be particularly challenging, however, as consumer spending, which accounts for 66% of the U.S. economy, is in jeopardy due to concerns over falling home prices, subprime mortgage defaults and tighter credit restrictions. The Conference Board, a New Yorkbased nonprofit research firm, last week reported the sharpest decline in consumer confidence in two years based on a survey of 5,000 households. “A softening in business conditions and labor market conditions has curbed consumers’ confidence this month,” said Lynn Franco, director of The Conference Board Consumer Research Center. “In addition, the volatility in financial markets and continued sub-prime housing woes may have played a role in dampening consumers’ spirits.” Franco said she expects consumer confidence to rebound as the holidays approach. F ShopperTraK RCT Corp., a Chicagobased retail research firm, said consumer traffic at the country’s top shopping malls has been on a six-month decline. “It’s the first time that we’ve seen traffic fall across the U.S., and we’re alarmed by this continuous drop,” Bill Martin, CEO of ShopperTrak, told CNNMoney. That said, the holidays typically represent a time when consumers throw caution to the wind and stock up on the summer box office hits and TV fare either as DVD gifts or for themselves. Strong TV DVD season releases of “Lost” and “Grey’s Anatomy,” and theatrical boxed sets or deluxe editions of such titles as Blade Runner, are expected to drive business, retailers said. Perennial holiday favorites stocked in excess include How the Grinch Stole Christmas, The Year Without a Santa Claus, Rudolph the Red-Nosed Reindeer, Frosty the Snowman, Santa Claus Is Comin’ to Town (the CBS ‘60s classic); It’s a Wonderful Life, White Christmas, Scrooged and Elf. “We are looking forward to the fourth quarter and the release of many of the year’s top-performing titles on DVD,” said Randy Hargrove, spokesperson for Blockbuster Inc. “For competitive reasons, we have not disclosed specific promotions that may be lined up.” He said Blockbuster is not providing guidance on the impact the fourth quarter and holidays will have on its financials. Todd Zaganiacz, president of National Entertainment Buyers Group, which represents 300 independent video rental dealers, said with both rental and sellthrough adversely affected by first-half results, the fourth quarter and winter holidays will see a competitive landscape dotted with consumer incentives. “I believe this year, more than ever, retailers are looking at fourth quarter and Christmas to make or break the year,” Zaganiacz said. “I do think we are going to see some major price gouging by select [retailers] to draw in any business they can.” He said he also expects some studios to repeat a 2006 strategy that called for staggering fourth-quarter releases into 2007. “Lionsgate held several major titles (Saw 3 and Crank) until January for release, and they owned the month,” Zaganiacz said. “It’s a very smart move, in my opinion, if they do it again.” period as a major litmus test on the continued viability of HD DVD and Blu-ray Disc. It is widely considered a reality that Toshiba will bow HD DVD players below $200 around the holidays — a price point Universal Studios Home Entertainment president Craig Kornblau has said could be the turning point with consumers in the format war. Consumer research conducted by Warner Home Video found that 31% of respondents felt price was a determining factor in the purchase of high-def packaged media. About 20% of respondents identified the format war as a significant barrier to entry. Retailers foresee more modest expectations in the fourth quarter and holiday season with HD packaged media experiencing, at best, incremental growth despite the arrival of titles such as Transformers and “Harry Potter” in high definition. NEBG’s Zaganiacz said it has become a challenge trying to match consumer title choices with a particular format. “If you want Transformers, you now have to go HD DVD; if you want Spider Man 3 Fourth Quarter Continues HD Impasse? you have to go Blu-ray,” he said. “It’s beA major marker in the fourth quarter come impossible to tell a consumer which and holiday season will be the perform- way to go if they want to invest in a highance of high-def packaged media. Propo- def format because it comes down to what nents on both sides have earmarked the movies they want to own.” 20 Home Media Magazine September 2–8, 2007 http://www.homemediamagazine.com
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