Magazine article Screen International

Supermarkets Bring Hope to UK Video Market

Magazine article Screen International

Supermarkets Bring Hope to UK Video Market

Article excerpt

As Hilco swoops to rescue HMV, Geoffrey Macnab reports on how optimism is returning to the UK video market.

In the first months of 2013, prospects for the UK video market looked apocalyptic. HMV and Blockbuster had both gone in to administration. There was the danger that specialist video outlets would be wiped off British high streets altogether.

Three months on, problems remain but there is also rising optimism.

Restructuring specialist Hilco has stepped in to buy struggling entertainment retailer HMV from administrators Deloitte, in a deal believed to be worth £50m.

In late March, investment company Gordon Brothers Europe bought 264 Blockbuster stores out of administration, saving 2,000 jobs.

In early March, The Telegraph reported that WHSmith was returning to the CD and DVD market. Contacted by Screen, a spokesperson for Brunswick, the PR Company that advises WHSmith, denied that there had been any change in the company's entertainment strategy.

UK video games retailer GAME is understood to be upping its commitment to film (and to Blu-Ray in particular).

The UK video market is still huge. Physical retail was worth £1,542.9m (66% of the overall market) in 2012.

One sign of the strength of the video market is the aggressiveness with which the UK supermarkets are rushing into it. Their volume share of the video market has grown to over 40% in the last five years.

Rupert Preston of UK independent distributor Vertigo calculates that "80% to 90%" of the DVD business on Vertigo's recent hits The Sweeney and Horrid Henry was done through supermarkets".

He adds: "They (supermarkets) are huge. If you have a film that works in a multiplex cinema, it will then sell naturally in a supermarket."

The old idea that the supermarkets use video simply as a loss leader no longer applies.

Sainsbury's, Asda, Morrison's and Tesco all clamoured to offer cut price deals on Bond movie Skyfall when it was released on DVD and Blu-Ray in February. Such promotions are bound to continue but distributors say that supermarket pricing of DVDs now tends to be more "realistic".

"They (the supermarkets) have all said that home entertainment is a key part of what they do," says the home entertainment boss at one leading UK indie distributor, speaking anonymously as his company is in ongoing negotiations with the supermarkets.

"Supermarkets are very margin driven and they want to see a return on the space."

According to recent research, 31% of video disc buyers think videos are an important factor when deciding where to shop for groceries and 71% regularly or occasionally browse the video section in their local stores.

With shelf space at a premium, supermarkets don't stock a big range and certainly don't offer catalogue titles alongside the groceries and nappies. They want new releases, kids' movies and chart titles.

"Overstock is a supermarket's nightmare because they have got such a massive range of items," Lavinia Carey, director general of the British Video Association (BVA), suggests of the huge turnover in video titles.

Nonetheless, price points have risen and the supermarkets are increasingly keen to cater their more upmarket customer base. …

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