CANNIBALIZATION?

DAN ALAIMO

The sell-through market has grown tremendously in the past few years. That has added another layer of complexity to the video buyer's role, according to participants at SN's video roundtable.

"There are a lot more sell-through titles available these days than there ever have been," said Denise Darnell, video supervisor at Southeast Foods, Monroe, La. "Every month you have 10 or 15 different sell-through titles that you might want to pick up," she said.

"You also have to be more conscious now with your buys as far as how many you sell and how many you put on your rental wall," said Matthew Feinstein, vice president of Marbles Entertainment, Los Angeles.

Collections of sell-through at home are a competitor to rentals, noted Dennis Maxwell, director of video at Reasor's Foods, Tahlequah, Okla. "You are competing for people's time and it takes an hour and a half to two hours to watch a movie," he said. But he added, "You still have to get your share of both markets. You've got to sell everything you can."

Here is how the discussion about sell-through went:

SN: What are the most significant changes you've seen in the sell-through market in the last year?

DARNELL: There are a lot more sell-through titles available these days than there ever have been. Every month you have 10 or 15 different sell- through titles that you might want to pick up. Plus, we believe that more customers are buying and collecting now than ever.

SN: Is that abundance of titles a good or bad thing? Can you have too much?

DARNELL: Sometimes it is tough when you have too much. It gives you a better opportunity to pick and choose, though. You are not just stuck with one title. Also, when we are competing with the Wal-Marts or Kmarts and they have really cheap prices, maybe featuring one of the titles, that gives us the chance to feature something else.

MAXWELL: With sell-through, you have to realize that after you have sold that product and made your money on it, it becomes a competitor to your rentals. You are competing for people's time and it takes an hour and a half to two hours to watch a movie. People are probably watching the same amount of movies as they did before, but now they have 200 movies at home, and they watch some of those, and every time that they watch one, it is competition to ones you would have rented. But I don't think there is anything you can change about that. You still have to get your share of both markets. You've got to sell everything you can.

FEINSTEIN: You also have to be more conscious now with your buys as far as how many you sell and how many you put on your rental wall. For instance, a title like "Bambi" that was reissued, everybody purchased it, but nobody wanted to rent it, so if you put a whole bunch of copies on your rental wall, it just wasn't going to move. But on a title like "Matilda," I felt that more people wanted to rent it than own it, and it did better as a rental than as a sell-through.

MOLITOR: I've seen many consumers stand there deliberating over a movie that is $12 or $15. They think about the rental charge and the additional day charge, and whether they should just buy it because the kids are going to watch it two times. I see a lot of that going on also.

DESORDI: It's changed the way we book our buys because there used to be a clear line that divided the business. One side was rental and the other was sell-through. Now you have to decide, if I am bringing it in for sell- through, how much of it should I bring in for rental. The cannibalizing question is another one of the big issues, but I don't think anybody knows the answer at this point. They are feeling it out on a title-by-title basis.

FEINSTEIN: That's why screeners are so important to be able to make that judgment on what you want to put where.

MAXWELL: You sit down when you buy and look in a crystal ball and come up with something. For example, on "Jerry Maguire," how many people are going to buy that? I have an opinion, but it is yet to be seen. It is an R-rated movie. Are people going to buy it or are they just going to rent?

FEINSTEIN: I think with that title it is going to be very strong for both sell-through and rental, while something like a "Toy Story" would be much stronger for sell-through.

SN: Mass merchants like Wal-Mart are the dominant competitor in sell-through. How much are the super electronics stores, like Best Buy and Circuit City, starting to impact this business?

CARTON: They clearly have good presentations of product, particularly when the hits do come out. I don't know how many people go there to buy those titles. I think they do get a good impulse buy from people who are in the electronics stores for other purposes.