When the largest corporation in the world shifts its merchandising strategy away from your product, you’re bound to take notice. This is the dilemma facing Hollywood movie studios, according to the Wall Street Journal. Mega-retailer Wal-Mart, whose balance sheet exceeds the size of many countries, is in the process of revamping its stores through what it calls “Project Impact”. Designed to reduce clutter and more prominently feature big-selling items, the new strategy is part of Wal-Mart’s attempt to attract more upscale shoppers.
One major casualty of the new strategy is the corrugated display case used in many Wal-Marts to feature new releases and hot-selling movie titles. The move is widely believed to telegraph the retailer’s lagging faith in the DVD format’s continued profitability, and likely signals a reduction of shelf space for the format.
“We think the new strategy implies Wal-Mart no longer sees DVDs and Blu-ray discs as traffic drivers,” J.P. Morgan analyst Imran Khan said.
While I believe there’s still a future for the Blu-ray format, there’s no denying the DVD retail industry is in a protracted, and most likely permanent decline. The bottom line is: one out of every three DVDs sold in this country leaves the store in a Wal-Mart bag. This new strategy has HUGE implications for movie studios already battling to keep their format afloat.
As has been discussed previously on this site, all is not neccessarily lost for Hollywood. Mr. Darwin’s dictum of “adapt or die” definitely has application here. If the studios find innovative ways to compensate for this dwindling part of their revenue stream, they can assure their future viability. What’s your take on all this, Insiders? Let us know in the comments.
[via The Wall Street Journal]