The meteoric growth of sell-through is either killing or saving the rental business, depending on a given retailer's perspective.
Some said the increase in titles direct to sell-through is drawing away traffic from the rental sections and whittling away at the once-ingrained consumer rental habit. For example, retailers said "Mission Impossible," set for Nov. 12 sell-through release, would have been released initially at rental pricing in past years.
But others see sell-through as a way to increase new release depth of copy at a very low cost, and thus satisfy more customers. It enables promotions such as guaranteeing the availability of the title, offering a free rental if it is not in stock.
"I've become increasingly dismayed at the number of titles being released directly to sell-through," said a video executive with a Midwest chain. "I strongly believe that is causing some people to get out of the business."
With sell-through titles displayed in the main part of the store, where they do best, there is less traffic coming into the rental section, the executive said. "Fewer people feel the urgency to come in and get these movies."
The executive is trying to encourage stores to put more sell-through copies on the rental racks. This will work better for movies like "Mission Impossible" than for a children's title like "Toy Story." "The problem is, you are not driving customers in for a specific purpose," the executive said.
"Most of the movies that did over $100 million at the box office are going to be released for sell-through. Try to convince me that is not going to affect my rental business," said the executive.
It's a different story at Nash Finch Co., Minneapolis. The company uses the constant flow of sell-through products for rental as another way to create more of an effect with new releases at a low cost, said Clifford Feiock, video coordinator.
"Not only do we rent them like crazy when they are new, but we are selling them off used. It's a wonderful circle to get going," he said.
But Shirley Decker, video buyer at Goff Food Stores, Haslett, Mich., which has closed three of its five rental departments, sees sell-through cutting into rental revenues. "The studios are robbing Peter to pay Paul when they release titles for sell-through. The prices are so low, people would rather buy than rent," she said.
Four or five years ago, a movie like "Mission Impossible" would have been released to the rental market.
"But now, more and more big titles are released as sell-through at great prices and for increased volume," said Decker.
Video distributors believe that the increase in direct-to-sell-through product is good for the rental business. Titles like "Independence Day" are "a huge, huge, huge opportunity for both rental and sell-through," said John Fincher, national account sales at Baker & Taylor, Morton Grove, Ill. "Retailers are tripling the new release display space for those hits."
