NEW RELEASES RULE

Maybe it's true: Video customers have seen them all.es has never been higher, and they're adjusting their buying and merchandising to respond to it. New releases -- as a percent of inventory -- ranged from 20% to 60% for the participants in this year's video roundtable.But the business of presenting new releases is not without controversy. Some take the lead of Blockbuster Video and Hollywood Video,

Maybe it's true: Video customers have seen them all.

es has never been higher, and they're adjusting their buying and merchandising to respond to it. New releases -- as a percent of inventory -- ranged from 20% to 60% for the participants in this year's video roundtable.

But the business of presenting new releases is not without controversy. Some take the lead of Blockbuster Video and Hollywood Video, leaving titles on the new release wall for as long as a year and a half. But others think this is folly.

"The customers aren't stupid," said Greg Rediske, president, Video Management Company, Tacoma, Wash. "They know that the movie isn't new if you've had it out there for a year and a half. A shopper in a convenience mode isn't going to stand there forever and a day wading through a whole bunch of old stuff to find the new releases. So I think some people are deceiving themselves by saying they have 75% new releases," he said.

The discussion on new releases also encompassed pay-per-view windows. Patty Price, video/service center merchandiser, Randalls Food Markets, Houston, participated in this segment as well. Here's what the retailers had to say:

SN: What percentage of your rental inventory is in new releases? How have you changed your approach to new releases?

VANOVER: Around 30%, which is higher than previous years. We have more space, and it seems like we're keeping titles on the new release wall longer, so therefore, we have a higher percentage. It's not at the expense of catalog, which is doing well for us. We haven't changed our depth of copy on the big hits.

MUELDENER: 60% on up is what we're shooting for. We started setting our new stores that way about two years ago. We also took a closer look at what was renting out of catalog and found that we spent a great deal of time chasing what's ultimately a 50 cent rental. It was getting to the point where the customers just didn't want catalog anymore. I could price it at 25 cents a copy, but they don't want it; they've seen it. Maybe the home library collections of videos slowly eroded that portion of the business. I don't know.

We increased depth on individual titles, but we aren't going as far in breadth of title selection anymore. We're not getting return on investment on some of the B titles.

REDISKE: Somewhere between 20% and 50%, but there are some issues related to that. First, what's a new release? A lot of stores, including Blockbuster and Hollywood, keep stuff on the release wall for a year or a year and a half. We define a new release as six months or less. To increase copy depth, we've attempted to bring in more of the A titles, but bring them in as part of a promotional strategy that generates more excitement and more overall gross revenue for the department. At the same time, however, if you have a whole wall filled with three titles, that's somewhat limiting. We continue to have a good blend of new releases.

UFER: It's difficult for me to give a percentage, because many of the stores that we've opened in the last six to eight months have been smaller operations inside grocery stores. I'm going into smaller communities. I'd say that my new-release space and my storage ranges from 30% up to 45%, with the bigger stores having a lower percentage and more catalog inventory. Overall, I think my stores now have more space allocated to new releases than they did in the past.

The copy depth and shared revenue programs have contributed to that. The vast majority of customers are looking for a new movie that's just out on video. They're not coming in looking for an older movie.

PRICE: We've increased depth of copy on all titles due to the customer demand. We purchase enough to make our customer happy, with the intent to have a return on investment.

SCHLOSS: We're constantly policing the new releases, although we don't have a blanket policy to increase new releases. We look at individual stores one by one and ask: "What can we do to stimulate more sales?" In a lot of cases, it's in increasing our new releases and eliminating catalog titles. You don't want to eliminate too much catalog, but on the other hand, new releases generate 80% of your volume.

We probably have 25% new releases and 75% catalog goods in a typical store. We've increased the copy depth on the big titles quite a bit, especially the ones that come through at a sell-through price. We'll buy double the amount of copies than we would at $75 a copy.

SN: Have you changed your rental rate structure?

VANOVER: No. We get $2.50 a night chainwide on new releases. We check our competition pretty often and make sure that we stay within the right price structure within our area.

PRICE: No, we haven't. That's not what the customers are requesting. They want availability.

SCHLOSS: Not yet. We have in some of our outlying stores, but not for the majority of our stores. But we're looking to do that. In the outlying stores, where they don't have the competition, we've gone from $2.49 to $2.99 on new releases. But we're still at $2.49 on new releases in our other stores.

We've talked about having a second tier of rates for older new releases. We have two tiers right now: new releases at $2.49 and catalog goods at 99 cents. But we've talked about going to $1.69 or $1.99 for titles that are over 30 days old.

MUELDENER: It's still left up to each individual store to determine its rental rates. We're out there actively encouraging them to reexamine that.

REDISKE: Not in the recent past, no. Generally, I'd say most new releases in almost all of our stores are $2.49. Catalog rates tend to be 99 cents to $1.49. A lot of departments offer three movies for three days for $3.

UFER: No, I haven't changed my rental rates. I still have the overnight rental on the newest hits. VANOVER: I think all windows should be 90 days, and it has gotten a lot better within the last year. We try to order more when there are longer windows. We try to look at the length of the window.

MUELDENER: There was a movie recently that had a window of zero days. We took a very hard stand on that, and said we wouldn't participate if it doesn't have a pay-per-view window. What bothers me is when they don't tell you up front there's no window. When we found out there was no window on it, we didn't buy it.

UFER: The pay-per-view windows affect our business more than we realize. I'd like to see, of course, longer pay-per-view windows. But what I see is that the studios are trying to maximize their revenue on each title. They may be looking at video as only being viable for a short time. That's why they're really pursuing these other avenues. But I'd like to see at least 60- to 90-day windows on all rental priced titles.