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Release Timing and Development of Market

Although video and DVD technology has been driven by European and Asian (in particular Japanese) consumer electronics companies, market growth and penetration has been driven by software and Hollywood pressures. The international video and DVD markets have usually lagged the United States in terms of maturation and retail sophistication. In terms of retail and consumer patterns, the DVD market has generally mirrored the prior VHS sell through market.

In territories such as France, for example, where there was a long sell through tradition and sophistication of key retailers such as the hypermarkets (Auchan, Carrefour) the DVD market is vibrant. Accordingly, key retailers such as the hypermarkets, or entertainment software chains such as Virgin Megastore or FNAC, tend to have the same challenges that exist in the North American market: how is the product merchandised, how is it displayed, what are the promotional campaigns, is the price point appropriate, etc.

Additionally, with sophisticated merchandising and placement usually comes quality reporting. The ability of the distributor to see through to actual consumer sales forces the development of state-ofthe-art inventory management systems and distribution that allows quick store-level replenishment. Stock balancing can occur on a daily, and at minimum weekly basis, affording the distributor to respond to consumer demand while maintaining a greater level of flexibility in creating product.

The ability to tinker with stock balances, replenish inventory, and top up manufacturing is only possible with this level of reporting from retail, and the parallel ability of retail to handle changes rapidly. The type of systems that can report and consolidate by-title sales at store and chain levels on a daily basis, however, are only justifiable The Home Video Business 209 with certain threshold volumes; in essence, the entire supply side feeds on itself with volume driving sophistication, and fulfillment, merchandising, and manufacturing capabilities evolving with demand.

The United States is such a large market with diverse and distant retail distribution requirements that it developed this level of maturity quickly. That process has lagged in many international markets, but has now caught up in sophistication across the territories one would expect (e.g., much of Western Europe, Australia).

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