Home Media Magazine - July 13-19, 2008 - (Page 28)

NEWS Continued from page 1 www.homemediamagazine.com Hastings CEO Looks to Satisfy the Customer First-Half Disc Sales Grow its renowned eclectic product portfolio into 20 new research-driven companybranded concept stores that CEO John Marmaduke said not only invite direct interaction between the customer and product, but also have the look and feel of a multimedia shopping experience designed to entice customers to return. It’s the kind of store concept Hastings’ competition to the south — Dallas-based Blockbuster Inc. — covets and has designs on emulating. In a Q&A with Home Media Magazine, Marmaduke discussed Hastings’ business and its “constancy of change” mantra that hasn’t varied. I HM: Blockbuster has made it a priority to expand beyond traditional rental to include sellthrough of movies, games, food, hardware and related consumer electronics products. In short, they appear to be emulating your business model. Are you flattered or concerned? tomer and trying to get them what they store managers and staff about what Blu-ray want and not our sales philosophy. brings to the home entertainment experience? I HM: Can a DVD rental chain survive without Marmaduke: Yes, we updated our store pursuing sellthrough of related products, includ- manuals. And we think it is as imporing consumer electronics? tant to educate our customers, so we Marmaduke: We’ve always sold DVDs. make our signage as educational as We have been strong in sellthrough possible. But all the education and all forever because our customers wanted the training in the world is not worth it. Even though it offered a smaller a fraction of just seeing the Blu-ray margin [than rental], we felt we had to demo on the split screen Sony puts out. give them what we wanted. It certainly Seeing is believing. That’s the game turned out to be strategic. changer. I HM: Is used DVD sellthrough important to Hastings? Continued from page 1 Marmaduke: Probably not as big a deal with DVD movies as it is with video games. It certainly enhances the customer’s shopping experience through either upselling, trading and sampling product more economically. It puts them in the driver’s seat. Our sub-brand slogan is “buy, sell, trade, rent.” And that’s exactly what we mean to do. I HM: The home entertainment industry is staking a lot of its future on Blu-ray. How important is the format to Hastings? I HM: Is Hastings pursuing a kiosk strategy both in-store and/or through third parties such as Redbox, The New Release and others? Marmaduke: No, not right now. I HM: Will Hastings pursue a streaming or download strategy? Marmaduke: Probably neither. It’s probably just recognition of what the customer wants. And [Blockbuster CEO Jim Keyes] is just paying more attention to the customers. Marmaduke: As I said before, we think Blu-ray is a game changer. And customers get that [appeal of Blu-ray] I HM: Explain the new concept stores. when they see the side-by-side com- I HM: What do you say to the studios that Marmaduke: Within a multimedia parison on a flat-screen HDTV. want to circumvent traditional rental with samestore you have a number of differ- I HM: Are you working with any of the studios day cable VOD? Essentially, they want to put ent shopping experiences, including or CE companies to offer point-of-purchase or rental out of business while at the same time software, hardware, café and consum- educational kiosks for Blu-ray in the stores? providing you with content. ables. And you have to find a décor Marmaduke: Yes, we are doing the Marmaduke: Obviously, someone at and look that harmonizes and doesn’t displays with Sony because we think the studios hasn’t run the numbers. distract from those experiences. Blu-ray is that important. We are also The vast majority of movies they reI HM: Will Hastings increase its consumer working with other CE companies, but lease do very little box office, don’t electronics footprint to include Blu-ray Disc Sony was our primary lead. make money, don’t appear at a displayers, DVD players and HDTV? I HM: Is the rental option for Blu-ray a good count chain and rent very seldom on Marmaduke: Yes. We’ve been increas- catalyst for wider consumer adoption? VOD, if they are even available. And ing our CE footprint every year. We’re Marmaduke: Yes. We have been rent- the only income stream that is availexcited about the opportunity to intro- ing Blu-ray since it came out, and we able to the studios is DVD rental. So duce Blu-ray and HDTV to our custom- probably have the largest selection of why would the studios want to kill the ers. It could be a game changer. any retailer I know of. I agree with only channel that gives them millions I HM: Do you stock other Blu-ray players Keyes that allowing customers to try for their non-successful films? It just besides Sony’s PlayStation 3? Blu-ray is a great way of introducing doesn’t make sense. Marmaduke: We’ve been selling the them to the format without paying I HM: Some studios argue that the margins on PS3 already for some time since we are the higher retail price. You have to put cable VOD significantly exceed DVD rental. in the video game business and deal yourself in the home of the non-early Marmaduke: Maybe they should look direct with Sony. So it’s just a natural adopter video consumer. They already at total dollars and not margin percentextension. While we like change, we have a couple of standard-DVD play- ages. I think wiser heads will prevail. I spend our time focused on our cus- ers and maybe even an old VHS lying think these are one-and-a-half studios around. And when they get Blu-ray talking up VOD. I’m reminded of what movies they are not going to just throw investor Warren Buffet once said: “EvI TITLE CHANGE out all their DVD players. ery industry has three cycles: InnovaOn Page 20, the list of films included in They are going to continue to rent tors that create the business, imitators the Sony Pictures Home Entertainment’s both formats and not become a real that expand the business, and idiots “Martini Movies” collection was updated avid purchaser of Blu-ray until they are that destroy the business.” after press time. The first wave of titles convinced the selection and availability I HM: What stage are we in now? will not include Nickelodeon, but instead is up to the standards of DVD. Marmaduke: I can tell you that the Affair in Trinidad (1952), starring Glenn And from their perspective, renting music industry is in the third stage, Ford and Rita Hayworth. Blu-ray is low risk and high reward. and I hope the video industry doesn’t I HM: Was there any educational process for copy them. Marmaduke: We are totally re-engineering our Web site. Later this year and into 2009 we will align the site as more of a multimedia shopping experience, including digital delivery. We think digital distribution is a longerterm delivery channel, but we want to be there when our customers want it. I think right now it is for early adopters, and video-on-demand may end up being more of a portability issue than competitor to packaged media. according to studio reports. Home entertainment industry analyst Tom Adams isn’t surprised about the continued health of the packaged-media business, despite Wall Street’s negative perceptions. “Most analysts are techno-geeks with plenty of money and not much time, while most Americans are not technically savvy, and they have plenty of time but not much money,” said Adams, president of Adams Media Research. “The fact is, despite what many on Wall Street seem to think, there is very little digital downloading going on. We’re talking about $118 million in 2007 spending, and about $254 million this year — so against a $24 billion packaged-media market it’s really not making much of a dent at this point.” Blu-ray Disc sales alone should amount to at least three times what digital downloading is expected to bring in this year, studio executives say. In the first six months of 2008, consumers spent an estimated $194 million on Blu-ray Disc purchases, according to studio estimates — a gain of nearly 350% from the $43 million that came from high-definition disc sales the first six months of 2007, when growth was stymied by a format war between Blu-ray Disc and HD DVD. The format war ended Feb. 19 this year, when chief HD DVD backer Toshiba Corp. officially bowed out. Unit sales of Blu-ray Discs in the first half of 2008 were up 340% from the first six months of 2007, according to Nielsen VideoScan data. Nielsen numbers are based on point-of-sale data from most big retail chains with the notable exception of Wal-Mart and Sam’s Club. Factoring in Blu-ray Disc sales at those two retail chains, studio estimates peg the number of Blu-ray Discs sold in the first six months of this year at 7.37 million units. Adams said he expects the packaged-media business to be more resilient than other businesses during tough economic times. He notes that in the early 1990s, the last time the country faced a recession, the video rental business held its own. Today, the home entertainment business relies mostly on sales rather than rentals, he said, “so the question is will the $15 movie be as recession-proof as the $3 rental was in the last serious recession. And why wouldn’t it be? TO P 5 S E L L I N G DVD S First-Half 2008 TITLE STUDIO UNITS (MIL) Fox Disney Warner 5.3 4.8 4.2 3.8 1 2 3 4 5 Alvin and the Chipmunks Enchanted I Am Legend Bee Movie Para./Dream. 3.9 Source: Home Media Research National Treasure : Book … Disney TO P 5 R E N TA L S First-Half 2008 TITLE STUDIO Lionsgate Warner Paramount Universal Lionsgate 1 2 3 4 5 3:10 to Yuma I Am Legend No Country for Old Men American Gangster Good Luck Chuck Source: Home Media Research When you’re cutting back on luxury items, like trips to Hawaii and Europe and lots of other stuff, because of the high price of gas, buying a $15 movie to watch over and over and add to your collection seems a great alternative to more expensive entertainment.” Taking a http://www.homemediamagazine.com

Table of Contents Feed for the Digital Edition of Home Media Magazine - July 13-19, 2008

Home Media Magazine - July 13-19, 2008 Contents News News High-Def News Electronic Delivery News TV DVD Cine Mercado Reviews Pipeline Research Top 20 DVD Sellers Top 20 Rentals and Top 10 Charts Just Announced Christian Entertainment Review - July 2008

Home Media Magazine - July 13-19, 2008

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