HOME ENTERTAINMENT 2006

DAN ALAIMO

LAS VEGAS - While two competing, noncompatible high-definition DVD formats are bound to create some confusion in the marketplace, one thing is certain: Blu-ray and HD DVD have arrived and retailers will have to deal with them for the foreseeable future.

That was the consensus heard during this month's Home Entertainment 2006, the annual show of the Video Software Dealers Association, Encino, Calif., which has been renamed the Entertainment Merchants Association following its recent merger with the Interactive Entertainment Merchants Association, Wilton, Conn.

During his State of the Industry address, association president Bo Andersen urged retailers to embrace both Blu-ray and HD DVD, which are dueling to succeed the very popular DVD. "I am convinced that consumers can accept the complications of multiple formats, but only if they fully understand these complications at the point of purchase," he said.

Borrowing the title of a current documentary featuring former vice president Al Gore, Andersen termed the existence of the competing formats "an inconvenient truth." It's inconvenient because "retailers must now become experts in both formats. We must accentuate the positive and eliminate the negative. There's no reason to talk to consumers about format wars - there is every reason to make sure that the consumer gets the right disc for his player."

Supermarket video executives interviewed at an annual dinner held for them during the show by Ingram Entertainment, La Vergne, Tenn., reflected mostly a wait-and-see attitude.

"We are going to let the consumers make the choice on the formats," said Donna Kittrell, category merchant, Reading Center/video, Wegmans Food Markets, Rochester, N.Y.

Joe Miller, director-hardlines shop, HBC/GM merchandising, Albertsons [Supervalu], Boise, Idaho, said the situation is reminiscent of the Betamax-VHS videocassette conflict in the early 1980s. "I think the industry needs to settle on one format and go with it," he said. However, "whichever one the customer determines to be the best format, we'll be there for them," he said.

Wait-and-see is contrary to the video philosophy at Schnuck Markets, St. Louis. In 1997, on the second day of DVD availability, Schnucks had DVD hardware and software available for rent in 15 stores, even though it was not in one of the official test markets.

This year, while Blu-ray and HD DVD were being demonstrated to retailers for the first time here at the show, Schnuck was putting software in its stores, said Terese Davis, video specialist. "We are offering both formats to our customers," she said. Even though few, if any, hardware units have been sold, "we are just trying to send the message that we have them available," she said.

For now, Giant Eagle, Pittsburgh, is putting the software in two stores with large sell-through sections, said Chuck Porter, director, video and entertainment. While he is enthusiastic about the new high-definition technology and additional potential revenues, Porter also is concerned about possible confusion in the marketplace. Even so, once more hardware is sold in the fourth quarter, "we will support the formats," he said.

Most of the stores of Coborn's, St. Cloud, Minn., are in rural markets. "We will have to wait until our customer base has completely adapted to high-definition televisions before they adapt to HD DVD and Blu-ray players," said Brad Ufer, video/photo supervisor, Coborn's. "Our hope is that one format will win out and make it easier for retailers and customers to understand."

A video executive with a large Midwest retailer said it will be a long time before the new formats are significant to supermarkets. "I think it will be good for the market eventually when there is one format," he said.

A video buyer with a large Northeast chain added: "We are just waiting to see which one becomes dominant. We'll be on top of whatever is the emerging technology."