Los Angeles – National retailers that control the lucrative DVD market are pressuring Hollywood studios to give them the same favorable deals being offered to Web-based download services such as Apple Computer Inc.’s iTunes.
The latest expression of concern from retailers was a letter sent to studios by the president of Target Corp.
The letter warned that Target might have to reconsider the amount of shelf space allocated for movies if studios undercut the wholesale price of DVDs by giving online services a better deal on digital offerings, said a studio executive who saw the letter but asked to remain anonymous because he was not authorized to publicly discuss its contents.
Similar concerns have been expressed by Wal-Mart Stores Inc. and other retailers.
“Clearly there is some concern that there is some erosion by downloading,” Judith McCourt, market research director at Home Media Retailing, said Monday.
Target declined to provide a copy of the letter sent last month.
In a prepared statement Monday, Target called for “equity between the alternative means of delivering movies to consumers.”
“Target does not object to competition, but we do expect a level playing field upon which to compete with the online services,” the company said.
At issue is the low price some studios charge for films downloaded through such fledgling services as Movie Link, Cinema Now and Amazon.com’s recently launched Unbox video store.
Overall DVD sales should grow in 2006, propelled by continuing demand for TV titles such as “Lost” and recent hit movies such as “X-Men: The Last Stand,” according to Home Media Retailing magazine.
But sales could decline in 2007, according to industry analyst Richard Greenfield of Pali Research.
Online movie download services now account for less than 10 percent of movie sales, hardly a threat to retailers.
But retailers fear a shift in the future, when downloaded movies can be viewed on TVs as well as computer screens.
