DALLAS -- Many factors go into buying the right number of new releases in order to satisfy demand and maintain a store's profitability, but video executives agreed the most important consideration is understanding the customer.
"In today's competitive market, intelligent inventory control is absolutely essential. To accomplish this, you need to know as much as possible about your customers' preferences," said Peter Frey, chief research scientist at Entertainment Decisions, Evanston, Ill. Frey, who has developed a computerized personal recommendation system, Clair V Movie Mindreader, for video customers, was a participant in a panel discussion on buying video releases during the Video Software Dealers Association Convention held here earlier this year. Others on the panel, moderated by Bob Tollini, senior vice president of marketing at Major Video Concepts, Indianapolis, included Rich Thorward, president, The Movie Monitor/Starguide, Glen Rock, N.J.; and Wayne Bailey, president, Accurate Inventory Management, Aurora, Co.
"There are many factors in buying the right videos, but understanding the customer is essential," stated Bailey.
In addition, Bailey mentioned other factors retailers should consider when buying, including the overall movie's appeal, the attractiveness of the box art and the studio's advertising budget for the film, which creates consumer awareness.
"There also are titles that, regardless of how well they did theatrically, people will rent them. The question is will enough people rent them to get you your money back? We're in the business of investing money and getting it back," Bailey commented.
Thorward of The Movie Monitor pointed to other considerations in buying, such as the number of screens the film appeared on during its theatrical run, how much the film grossed, the demographic of those mostly likely to view the film, the reviews, the film's category or genera, length of pay-per-view window, any previous exposure and the price of rental and sell-through.
The average film is released to about 1,500 theaters, said Thorward. "Look at the number of theaters and the pattern [the film] had theatrically. Did it gross slowly, or was it just the opposite? How long did the film run?" he asked. "Look at when it was released."
Thorward mentioned, for example, "Star Trek: Generations," which opened on 2,500 screens and earned about 80% of its revenue in the first three weekends of its run. The film got support from "Star Trek" fans, but its popularity faded quickly. For retailers to better understand their customer base, Frey suggested taking full advantage of zip code information provided by the U.S. Census Bureau. Such information includes income, cultural differences, housing information and types of employment.
This information combined with a film's box office tallies can produce an accurate forecasting model for retailers buying decisions, said Frey. "It's no longer appropriate to follow the crowd and do what tends to work for the average store. Up-to-date information on customers' interest is necessary for success in today's competitive environment," he said.