GHOST TOWN IN THE DESERT

Man, after spending the better part of a week in Las Vegas one thing is certain... I've gotta play something else other than slots. Maybe I'll try the stock market; at least that's only "paper money." Anyway, it's early January, so that means it's time for my annual trek down to the CES. This year, there was something extra special. The VSDA convention was held concurrently, so it was double duty this year.

My general impressions for both the CES and VSDA weren't much. On the CES side there was no true breakout technology. The product that seemed to generate the most interest was the extended push for Texas Instruments DLP technology. Yes, the same DLP that is currently being used in selected markets for film projection. Multiple manufactures were displaying units, which integrated this new digital processing system, even Yamaha! The other big news was recordable DVD. No it's nothing new, but at least it will actually debut this year. There are three competing formats: DVD-RW, DVD+RW and DVD-RAM and fortunately two of the camp are finally talking, so we may be able to put hits multi-format crap to rest.

This brings me too the VSDA...

You've seen major announcements (there were some?) as Pete has been updating over the past few days, but overall this show was a dud. Honestly, I've only been to three of these things, two as a retailer and this one as a reporter, but I'd have to say this is the worst yet. Attendance was WAY down compared to last year, which some distributors attribute to this convention's proximity to last years. The official numbers haven't been released, but guesses are around 5,000 attendees, more than 50% below last year. This is not including the AVN attendance, which can not be easily separated from the VSDA's attendance figures. (How convenient.)

When talking to certain distributors on the convention floor, feeling were mixed, but mostly down on this year's show. Almost everyone complained about the lack of foot traffic, while the major distributors were happy with their behind-closed-doors meetings. Of course, being a member of the press, and the fact these meeting rooms were separated from the main floor, I'll have to take their word for it. When I went through some of the rooms in the Sands Convention Center, things didn't seem very busy.

Sadly most of the conferences scheduled for this year's show were canceled due to the low turnout. It didn't help that even the DVD Supersession died a twisted death, when it was replaced with a discussion about rental's importance in the future of DVD. Speaking of which...

The Grim Reaper...Rental Pricing?

The most exciting news, and I am be facetious, was that Blockbuster finally made their official push for rental pricing on DVD. Lets all jump up and say thank you, because that's definitely a cause we've all been fighting for. While I could not find a copy of the proposals Blockbuster sent to each major studio, it apparently outlined how much money each studio lost from their share of potential Blockbuster rental transactions, because of the current sell-through system for DVD. According to Blockbuster's estimates $1.1 million in revenue was lost, per title, this year.

When multiple reporters asked VSDA President Bo Andersen about the VSDA's stance of rental pricing of DVD, he said the VSDA isn't about taking a stance, its about "opening discussions." He also claimed, rightfully so, that Blockbuster was not the first retailer to suggest rental pricing on DVD. The only difference is that Blockbuster was the most apprehensive towards DVD, and controls over 40% of the rental transactions in the whole industry (not to mention they account for 50% of rental units on most titles).

Within this impromptu roundtable discussion with Mr. Andersen many subject pertaining to the video industry were asked. When I asked him specifically about the general implosion of Hollywood Video and its value in the stock market, he blamed it on a "poor e-tail strategy." He stills feels confident in their future success. I'll bet Mark Wattles, plus the 10% of marketing and store development staff that were fired, don't share his same level of optimism.

When Andersen was asked about his feeling about the convention this year, he was please with the closed-door meetings, but admitted foot traffic was down. He was very disappointed in the cancellation of the DVD Supersession, as well as many other conferences. When asked about the rift between the CES and VSDA, he stated that he's had some constructive talks with the head of the CES. I hope so; transportation involving both of these conventions was a disaster this year!

A Distributor's Perspective

I had a chance to talk to Fred Eggink, a sales rep for CAV distributing, and veteran of seventeen of these VSDA show on Thursday morning and asked him about his impressions. I was going to try to talk to people from Image Entertainment as well, but their company policy is only to be quoted by their marketing department.

When I asked Fred what he thought of this year's VSDA he stated, "This year's show was too close to last year's. It killed the attendance. It doesn't help that 50% of the studios have pulled off the main floor. There seemed to be no interest by the retailers or the studios. Everyone seemed to be more interested in the adult show."

I also asked Fred if the thought the VSDA/VSDA Convention had outlived it's usefulness. He answered, "No. It's just that no one's interested. It needs to be set up more as a forum between the studios and the retailers. Maybe reorganize it to have local representatives to work out the retailer's issues with the studios. The VSDA never addresses the retailers anymore." Fred also suggested that the VSDA convention should be fully integrated into the CES. Finally I asked him about the Blockbuster rental deal, and he quickly said, "No comment."

One of the overlooked announcements from the show include Netflix getting an exclusive three month rental window on the art-house hit Croupier. After this window, which starts in March, Image Entertainment will handle the sell through of the DVD.

Thought For The Day

If I were retailer, the VSDA convention is no longer needed, since this business has become so, how should I put it? Fend for yourself? This year's VSDA convention led to more questions than answers, and there are serious rumblings about this actually being the last convention. To be honest with the Internet, e-mail, and other news services, the VSDA convention, in its current form really serves no purpose. The same might be said of the actual VSDA...

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