June 02, 2005
TV-DVD trend near flood stage?
By Thomas K. Arnold
Studios are pumping out TV-DVD packages faster, and more furiously, than ever. And as the volume increases, the packages themselves are getting thinner so there's room for more at retail.
As of May 20, 207 multidisc TV series have come to market this year, 55.6% more than at this same point last year, according to the DVD Release Report, a weekly industry tip sheet. Virtually no Tuesday street date goes by without a handful of complete-season TV sets arriving in stores. And even obscure, short-lived series like "Ned and Stacey" are being resurrected on DVD.
Kevin Cassidy, executive vp sales and product at Tower Records and Video, credits escalating consumer demand for the rush but throws out some cautionary words. "It's easy for the studios to continue at this pace, but it may be self-defeating," he said. "At what point do you inhibit sales of initial season sets? Why don't those get a price reduction or rebate when the newer seasons are released? How many titles is enough in this category?"
Gord Lacey, who operates the TVShowsOnDVD.com Web site, said: "I think it's starting to get a little strained. There are 17 season sets being released on June 7, and consumers are going to have to pick and choose. Some visitors to my site have even begun asking why the studios are loading certain dates."
The answer is easy: There's so much stuff coming out that "loading" certain dates is inevitable. At a time when the DVD business overall is beginning to soften, TV-DVD is one of the few growth areas left in what is fast becoming a mature business. Merrill Lynch analyst Jessica Reif Cohen released a report in the fall in which she predicted that the TV-DVD market will grow at an annual rate of about 30% a year, topping out at a projected $3.9 billion in consumer spending by 2008.
The overall DVD business, meanwhile, is no longer growing in the double digits, as it has been since its March 1997 launch. In April, consumer spending on DVDs even took an unprecedented dip of 1.7% from April 2004, the first year-to-year decline in the format's history, according to a Home Media Retailing market research analysis of Nielsen VideoScan numbers.
No wonder, then, that suppliers are ready and willing to clog the DVD pipeline with TV shows new and old, popular and obscure.
"I don't think anyone's really changed," said Mark Rashba, vp catalog marketing at Sony Pictures Home Entertainment, which this year is releasing nearly 80 season sets. "We all saw the TV business migrating toward accounts that support depth and breadth of product, and our approach here remains the same -- steady and true. We have a strong number of new-to-DVD series, and then the rest of the mix is filling up existing series."
Said Steve Feldstein, senior vp marketing communications at 20th Century Fox Home Entertainment: "There will always be room for quality programming at retail and in consumer homes. The shakeout happens at retail, in sales performance. If it doesn't sell, it's not there."
Universal Studios Home Entertainment is so up on TV-DVD that it plans on releasing twice as many titles this year as it did in 2004.
"Our research shows that there is no sign of the TV-DVD market slowing down," said Ken Graffeo, executive vp marketing. "Among DVD owners between the ages of 18-64, the number of consumers who have purchased TV-DVD product has increased 95% this year alone."
Still, concerns remain about there being too much of a good thing. There's a worsening shelf-space crunch at retail, to the point where in the fourth quarter of last year, suppliers were complaining that the shelf life of their hot new theatricals was being drastically shortened.
TV-DVD, which consists almost exclusively of bulky, multidisc sets, would appear to exacerbate this situation.
Warner Home Video senior vp marketing Mike Saksa puts the onus on retailers. The "critical issue" in TV-DVD, he said, is that retailers aren't devoting sufficient floor space to the category.
"Retailers have not expanded their sections anywhere near the rate of growth of the TV-DVD segment," he said.
Saksa said retailers need to make room not just for new seasons but also for previous seasons. "When a new season is released, the previous seasons experience an increase in consumer sales," he said. "But the TV-DVD catalog is not being properly merchandised, and therefore retailers are not maximizing their profitability."
Sony's Rashba said suppliers have come to expect that only the latest season of even a popular series like "Friends" will be in the retail spotlight and that as new seasons are released "previous seasons will become harder to find."
As a result, suppliers are trying to be as accommodating as they can. Rashba said Sony tries to schedule TV-DVD releases around hot new theatricals, increasing the flow when the theatrical release slate is light, such as the early part of the year, after the holidays.
Packaging also comes into play. "Thin is in," Rashba said. "We heard from a couple of major retailers who really support this category that the thinner the packaging, the more apt they were to put SKUs on the shelf. So we switched from primarily using Digipaks to using slim-line packaging, where we're able to get more discs in less space. We've even started using double hubs to really save on space."
He's not alone. While Buena Vista Home Entertainment's "Alias -- The Complete Second Season," released in December 2003, comes in a 2-inch-thick package, Season 3, which hit stores in September, measures just 1.25 inches. And the original "Star Trek" TV series is now available from Paramount Home Entertainment in three "complete season" packs, each two inches thick. Previously, the series was available on single DVDs, each with two episodes -- with each season taking up about seven inches of shelf space.
Universal's Graffeo said his company has begun using Pizolli twin-trays that allow two discs on one panel.
"In addition, we have cut the size of our packaging for 'Law & Order: Season 3' in half by using slim packs, which include three double-sided discs," he said.
Others are taking action, as well. "Recently we reduced the size of our boxed sets to nearly one-half the spine width," said Andy Kemp, vp sales at MPI Home Video, whose TV-DVD properties include "The Doris Day Show" and "Dark Shadows."
"We've been using the thin-pack Amarays in a slipcase to reduce the size," said Garson Foos, president of Shout! Factory, which has mostly cult shows such as "Significant Others" and "Undeclared."
"We've also been using twin-trays," Foos said. "We've not yet used DVD-18s, but we think about it a lot and will use them at some point."
Tower's Cassidy welcomes these moves. Just to accommodate the stepped-up flow of releases, he said, Tower stores in the past year have nearly doubled the amount of floor space devoted to TV-DVD product to the point where it now accounts for 15% of total DVD square footage.
Now, he's hoping for not just thinner packaging but also standard shapes and sizes.
"It is becoming increasingly difficult to effectively merchandise variable-sized packaging in this category," he said. "With the prolific nature of releases, a simple sales-per-square-foot analysis will have a negative effect on catalog releases and the breadth of the offering, going forward, unless some strategic pricing is in place."
Steve Beeks, president of Lions Gate Entertainment, takes a philosophical stance. "I think what you're seeing is the start of the maturing of that business," he said. "A lot of the 'A' shows have now been released, and suppliers are looking at the 'A-minus' and 'B' series. At the same time, we are finishing the cycle of releasing a lot of TV programming to DVD for the first time, which has created this bulge in the marketplace.
"As this market starts to mature," he added, "I think we have to look at other ways to keep it going, from reducing the size of the packaging to including more additional footage and other bonus features. TV-DVD is not what it was 12 months ago, or even six months ago."
I know another way to keep it going: Re-Releases. (Hint, hint, Buena Vista !