There's an absolutely fantastic essay by Chris Anderson on his Long Tail blog on the economics of DVD releases. Why, he asks, do retailers like Best Buy continue to sell DVD new releases at a loss when sales of those titles drops like a rock after two months on the shelves? Of course they are loss leaders, enticing people into the store so that they then look at iPods, printers and such, but what effect does this have on the rest of the retail industry? Niche stores like Blockbuster can't afford to offer the same discounts and often the titles don't become available for sale previously viewed until after that two months line has been crossed.

So, Anderson says, it would make more sense for retailers to look into developing a strategy based on older titles, where the cost of aquiring the product is less since it's been spread out over a longer period of time. The beauty of this approach is that sales price does not fall as fast as the price the retailer pays in aquisition.

categories Features, Cinematical