Walmart and pricing

[sungifts]

On a previous post, the question came up of preordering from Walmart and getting the lower price they offer on street date versus the price currently listed.

I just came from the Walmart website and they have added this:

 Preorder Price Guarantee! There's no need to shop around. We guarantee the lowest price on the Release Date and will automatically reimburse you the difference if you paid more.

I just wonder if you were to preorder, when would the movies arrive.  I have wanted to order one just to see.

[direct007]

let us know, we pick them up at the store, but it would be much easier to preorder online

[Victor Franqui]

Did you try them out? Update us

[sungifts]

I have not tried them yet, but will update you  when I do.  I really kinda forgot about it (so busy these days!!).  I may just do an order today!

[CornerVideo]

I apologize if this is a silly question but I really don't know....can we just get our movies from walmart or elsewhere and rent them in our stores?
Again, sorry if this is a dumb question.
thanks,
Judd

[IVR]

Not sure about Canada but in the US the First Sale Doctrine gives us that right.

[sungifts]

We order some from waxworks - just in case Walmart don't have the movie we want - then we buy the rest from walmart.  It really saves us a lot of $.

I won't use walmart exclusively because I am too scared I might need a movie and they won't have it.  It has only happened a couple of times, though.

You can even get tax exempt status with walmart if you want to take the time and fill out the forms.

[Anonymous]

Besides, online is always more expensive than at our local walmarts (yes, two of em to choose from, same price).

[amanda]

cornervideo, u can buy your videos from walmart if u want.

Just make sure that you have a license for the rental of them. New Brunswick and the maritime provinces have their own acts and regulations, compared to the rest of Canada, so make sure you check fully into that, and dont just trust a saskatchewanian. lol

[seanandsarah]

During a recent anti-piracy conference attended by all the major video and retail chains, Walmart's big solution to ending piracy to was the make the price point of new DVD's as low as $6.99, making it more worthwhile to purchase rather than steal OR EFFECTIVELY ELIMINATING THE RENTAL MARKET!

Anyone who thinks Walmart doesn't have enough clout to make the studios eventually agree to this simply hasn't done their homework.  The studios see that big box stores are selling more and more product (because all the Independants are buying their product from Walmart), much more than distributors are selling to independant retailers.  The low price point is agreed to and minimum volume quantities are required for all who want to purchase (yes, in the hundreds or higher).  Then having accomplished cutting of the Independant's supply chain, the big box stores issue a "1 per customer" rule for the first week of a release.  Then see how long we all last.

Walmart will see us all out of business.

Or would you rather work with your distributor.

Regards,
Sean

[amanda]

walmarts cheaper

[MoviePimp]

Get rid of rental market?  I doubt it.  Video stores would just adapt and rent out new releases at $2.00.  I bet I could rent the shit out of some movies at $2.00 each.  There are just too many people that have no interest in owning movies.  I don't know how many times I've had people rent a movie and are late and have spent at least 10 bucks to watch it and they could have bought it for $8.99.  They do it all the time and I just love it.  

I do think there is getting to be a major problem with bootleg movies.  People that buy bootlegs are not as concerned with the price.  They just want to see the movie early.

[Mick]

Hi Sean and Pimp,

Certainly, WalMart would love to see 6.99 price points on Hitch and every other big release out there.  And, of course, that desire is not really motivated by a desire to end piracy as much as it is a desire to eliminate rental.

I agree that WalMart has a lot of clout.  But, anyone who does their "homework" must also consider that WalMart's clout must somehow balance with the realistic needs of the studios. And one of those realities is that catering to WalMart's desire for $7 movies will hurt the studios more than fighting to keep prices up.  With the exception of the largest "A" titles, the rental segments in this industry contribute significantly to the revenues generated by "A-" and "B" movies...and in many cases, the rental segment provides the ONLY prospect for revenue for the studios.

WalMart might have no problem selling Hitch and Spanglish, they are not as successful selling Being Julia or Upside of Anger...and they don't even try selling Dark Town, the unrated version of Dorm Daze, American Crime, Blind Horizon, or thousands of other movies.

Another thing to consider is that not all independents buy their product from WalMart.  You may be surprised how many don't.  And the ones that do, certainly don't buy the titles I mentioned above at all.

And, I can't comment on what happens in Canada, but in the U.S. the studios and WalMart do NOT agree on price points.  Antitrust laws are meant to prevent that.  I doubt that other companies like Best Buy would not allow that to happen.

The studios need and want a rental based outlet for their products.  Those "A-" and "B" movies are important to them.  Having said that, a rental outlet can take many forms, from "bricks and mortar" to online rental, to PPV and VOD.  WalMart is a concern, and we shouldn't assume that they can't have an impact on the rental market.  But if we want to preserve our businesses, we must not only compete with WalMart but should continue to make our "outlets" more desirable to consumers than the other rental alternatives.

The question of whether IVRs should by from distribution or WalMart has been debated for a long time.  I agree that buying from WalMart may have long term consequences for IVRs.  But, it is hard to criticize an IVR who buys their 50 copies of Hitch from Walmart because doing so saved him/her $200 on just that one titles...and that is $200 that goes straight to profit and to their wallet.

Also problematic is the idea that video stores would simply adapt to $7 or $8 price points by renting their inventory for $2 per day.  The idea that we can cut our prices in half (as well as our profit margins) if cost of product were cut in half doesn't work for the vast majority of IVRs.  Cost of inventory is just one of the costs that we suffer.  Our rent won't be cut in half...neither will our cost of labor, utilities, insurance, taxes, etc.  So, a certain margin has to be maintained, and it is doubtful that the majority of retailers would survive at $2 per rental...the economic realities don't support that conclusion.

Mick

[Hardcopy]

If I can get my new releases for $6.99, then I can afford to rent them for $1.00 can't I?

[Mick]

Hi Hardcopy,

Can you really afford to rent them for $1?  Maybe you can...but I certainly can't...nor can a lot of retailers.

First of all, the number of people who rent Hitch from you would drop...even if they can rent it from you for only a buck...as well as your revenue from PV sales.

But, let's assume that you lose no business to Walmart's 6.99...and let's assume that WalMart will continue a policy that does not limit you to buying as many copies as you want.  And let's assume other things in your favor -- like getting higher than average turns per copy.

If you currently rent for $3 per rental, get 15 turns per copy (way above the national average), pay $15 at Walmart, and get an average of $7 on PV revenue from every copy you rent, then you "net" $37 per copy.

On the other hand, if you rent it for a buck, pay $7 at WalMart, and can now only get $4 per PV sale, with all other things being equal, then your "net" on that copy is only $12 for that copy.  You just lost $25!  You would have to increase your volume by 167% to make the same net as before.

If we apply criteria that are closer to averages, then you are talking 9 or 10 turns per copy and $3.50 per rental.  In these cases the loss is still $20 per copy, but in these cases, the rentailer would have to triple their volume to maintain net.

These kinds of increases are unrealistic.  But even if they were achievable, they would result in increased costs in labor, among other things.

If I am missing something, then help me out.  Under what conditions would $1 rentals work for the majority of rentailers?

Mick