TMS DVDs Rock!!

[Traveling Matt]

Hey Guys!

I just got my Timelife Muppet Show DVDs, and man, are they kewl! The picture and sound is superb!

In an ironic turn, The Dallas Morning News has an article in today's paper about DVDs, and mentions companies taking advantage of the newest entertainment venue by trying to capitalize on the craze. The Muppets (and their new association with General Mills) are mentioned as part of the latest licensing schemes.

==============================================

DVDs: Yours for the Taking

Thanks to the runaway popularity of home theaters, companies are discovering the value of the silver screen to the bottom line

By Katie Fairbank / The Dallas Morning News

DVDs are coming soon to just about anywhere near you.

From carmakers to cereal manufacturers, businesses are trying to capitalize on Americans' love affair with the movies by dispensing DVDs as promotional giveaways.

The freebies mark the latest twist on a phenomenon as old as gas stations giving out glassware for a fill-up or banks rewarding new account-holders with a toaster.

But the low cost of digital videodiscs means that companies can pass out something much more substantial – and desirable – than a mere Happy Meal trinket. After all, Americans already spend billions to watch, rent and purchase movies each year.

And they're doing the same thing with DVD technology, too. In just six years, DVD players have gone from being a technophile's fringe accessory to a movie lover's must-have. The players are now in one of every four U.S. homes, and the movies themselves are flying off the shelves.

"DVD is the fastest-growing product in history. It's a very aggressive rollout. Anything we can do that promotes the format is a good thing," said Mimi Slavin, vice president of promotions at Warner Bros.

Big business has noticed. That's why Kia figured that an ill-tempered green spokes-ogre could help it sell cars, and why General Mills is leaning on the Muppets to help sell its breakfast fare.

"Everybody is getting new DVD players, and they want to build a little library to get started. As a result, we're seeing new DVD promotions," said Jim Notarnicola, chief marketing officer with Dallas-based Blockbuster Inc. "Because so many people want to own them, it's compelling to give them for free."

Not surprisingly, the movie-rental giant is among those hopping aboard the DVD-giveaway bandwagon. The company had already announced last year it was clearing out some of its VHS tape inventory to make room for new discs.

Capitalizing on trend

"I'm not surprised to see anybody trying to capitalize on the DVD frenzy. It's the hottest consumer electronic product ever – and that includes CDs," said Mr. Notarnicola. How hot? Consider that DVD players didn't show up in Dallas stores till about 1996. In 1998, only 370,000 players were sold nationwide, according to the Consumer Electronics Manufacturers Association.

Today, about 31 million U.S. homes have at least one DVD player. As sales keep surging, the cost of creating the discs drops, too.

"What's going on is that duplication costs are getting affordable," said Fred Worm, partner of Dallas-based Boxcar Inc., a media and broadcast production company.

While prices vary, DVDs cost about $1 each to manufacture in quantities of 1,000. Overhead for such things as packaging and copyrights can increase the costs.

But there is profit to be made. DVD movies typically retail for $14.99 to $22.99.

Even at those prices, movie lovers haven't been deterred. They spent about $4.6 billion on DVDs last year, according to industry figures.

That kind of enthusiasm, experts say, makes the offer of a DVD marketing magic for companies trying to build brand loyalty. The search for the perfect promotion dates back years.

Frequent-flier miles, pioneered by American Airlines Inc., have proved an enduring example of the promotional genre. Virtually forgotten is the practice of movie theaters offering crockery as an enticement to patrons.

"The DVD is the newest visual technology, and people are moving to it. It would be perceived by consumers as a high-value promotion," said Dr. Thomas Barry, professor of marketing with Southern Methodist University.

And even at a buck a pop, a DVD copy of a box-office favorite isn't much more expensive as a giveaway than, say, an antenna ball or a pocket calendar.

"The per-unit costs probably become very negligible for these companies doing these promotions," Dr. Barry said.

Kia Motors America made its first foray into DVD giveaways by offering a free Shrek DVD to customers who took a test-drive.

"We enjoyed great success with last year's Shrek promotion," said Wally Anderson, vice president of marketing for Kia, the South Korean carmaker with U.S. operations based in Irvine, Calif.

So, the car company next turned to Hobbits, offering The Lord of the Rings: The Fellowship of the Ring to help launch its Sorento sport utility vehicle this summer.

'Brings more people in'

"It brings more people in," said Mickey Pratt, assistant manager at Central Kia of Irving. "It brings a lot of people on the lot."
General Mills Inc. expects its movie selections to sell breakfast cereals. But don't look for film noir or a slasher flick in your box of bran flakes.

The company is sticking to family fare such as films with Jim Henson's Muppets to accompany kid-favorite brands such as Cheerios, Lucky Charms, Cinnamon Toast Crunch, Golden Grahams, Honey Nut Cheerios and Honey Nut Chex.

"We're constantly looking to add value to our consumer offerings, and this is a great way to do it," spokesman Greg Zimprich said. "It's a great way to reach out to consumers, and in our case it follows a long line of premiums in our packages that keep up with trends in society."

Blockbuster has offered Lord of the Rings and Monsters, Inc. when a customer buys a frequent-renter card. More deals are in its future.

"This is the year the DVD is going mainstream. That means it makes a lot of sense to tap into that and make your product relative to that," Mr. Notarnicola said.

Other companies are offering DVDs as promotional prizes. For instance, Plano-based Dr Pepper-Seven Up Inc. will offer a Spider-Man deal.

And Coors Brewing Co. has a cross-promotional deal through which the company can buy DVDs produced by Miramax in bulk to use as giveaways.

Hollywood's embrace of the DVD promotions attests to their value for filmmakers, too: By hooking up with blue-chip consumer-products companies, studios in effect get extra advertising.

"Those companies are able to bring so much media to the table. You reach so many more people," said Ms. Slavin, the Warner Bros. executive. "It's a chicken-and-egg kind of thing. Those are the companies with big media dollars."

There are limits, of course.

For one thing, independent films and offbeat offerings aren't likely to get tapped as promotional items. So far, only blockbusters are being offered – and many of those have sequels in the pipeline.

"If a company can get a Shrek, they're comfortable in spending those kind of dollars. They might not want to do that for another movie. It's very title-driven," Ms. Slavin said.

And even with this type of success, the DVD-giveaway phenomenon probably won't stay sizzling for more than another year or two, experts say. The luster of new technology inevitably fades, just as it did decades ago when 33-rpm phonograph records were a premium thrown in with hi-fi stereos.

But until then, don't be surprised to see more companies pile on.

"This will probably be the biggest season for DVD and DVD promotions," Mr. Notarnicola predicted.

==============================================

- Billy