Challenging changes part of the home vid sphere

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Rip Van Winkle could have just woken up after a 10-year sleep and not had a clue about what happened to home video. Ten years ago VHS still ruled the day; studios were debating not if, but when, to implement rental pricing for this new format called DVD; and Hollywood was so concerned about the troubles at Blockbuster that they rolled out a whole series of plans and programs that would help Blockbuster and other rental dealers bring in plenty of copies of the hits on the cheap to satisfy demand.

Today, rental is an afterthought to most studio executives, and VHS has finally been dispatched from even the most rural Wal-Mart. And the hottest topic of conversation is how to manage the "supply chain" -- a broad term for the channel between replication facility and the consumer -- in the face of declining DVD sales and gobs of uncertainty about the looming transition to digital distribution.

The job of a studio executive has changed dramatically in the last decade. Sure, he's still doing a fair amount of schmoozing with key retailers, from flying to Minnesota to meet with Best Buy and Target execs to touching down in good old Bentonville, Ark., for one of those beloved Wal-Mart bus tours. But technological advances have made it possible to know as early as 6 a.m. Pacific Time on street date whether you've got a hit or a miss on your hands. And the rest of the day is spent carefully tracking sales and replenishing orders here and pulling stock there to maximize that brief six-day period when more than half your sales typically occur.

I write this because we're in the middle of a particularly busy time for the home entertainment industry. We've just finished the annual Home Entertainment Summit and the Entertainment Supply Chain Academy, and the annual Entertainment Merchants Assn. convention, still our industry's biggest annual shindig, is less than three weeks away. Studio executives are stretched tighter than ever because of the flat market, which has already led to cutbacks and layoffs, as well as longer hours for the staffs that remain.

The quest to make money is still first and foremost on everyone's agenda, but in this rapidly evolving business environment there's another, perhaps even more important objective: To keep up with all the changes our business has undergone, and to be prepared for even more changes in the future. Home entertainment is in the fast lane now, and if you're not up to speed you won't just be left behind, you'll likely be run off the road.
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