A personal journey into marketing DVD

KLAUS OESTREICHER shares his personal experiences and examples from some 20 years in sales and customer services. Creating markets for special interest product on four continents and lengthy discussions with key accounts and distributors familiarised him with the many problems that his partners face in their daily business and have influenced directly his companies’ success and cash flow.

Do not look for an absolute guide to success. Rather, the intention is to make you aware of ways in which you can influence positively the success of your production.

YOUR FILM IN THE CAN

YOU have produced a film, YOUR film. It is like a new baby was born, YOUR baby. You have put all your expertise, love and emotion into this film. You simply love it. And that is as it should be!

But, on the other hand, you have risked a lot of money and you are asking yourself some searching questions. Will my film become a success? Will I get my (or my producer’s) money back? Will I have new monetary resources for my next project, which I have already in mind? These are the right questions
Each finished product that is perfectly produced, attractively packaged and distributed with skill will not necessarily be a winner. But with a correct line of thought at an early stage you do increase your market chances considerably

There is a simple rule which you can follow up in any shop: The more a film is advertised and the greater its public awareness, the simpler its packaging will be. Perfect examples for this rule are films like Star Wars, Ice Age, Lord of the Rings. They are packaged in a regular Amaray Box, with an inlay, that’s it.

Automatically these films achieve prime placements in any outlet, are advertised on top positions in online shops with massive pre-order windows. But all other films compete strongly in any shop for shelf placement and the depth of stock quantity. These films, and certainly most of yours, if not all, are part of this second group.

Here’s another rule: The more a product is stocked in retail stores, the greater the perception that it is a product of importance. It is a soft component but part of sales psychology. Consumers’ buying behaviour can be manipulated by this rule but only to some extent. At a time when success of a store is measured by turnover, buying is centralised, markets are controlled by chains, and product offer and stock holding are regulated by strong computer surveillance, advantage for special interest product is difficult to achieve.

Here we face another danger and one that is, perhaps, financially the most crucial.

Never think that goods shipped by your distributor(s) to re-sellers have already turned into cash! Any chain that is managed in a modern way works the same way: Very long payment terms, ending frequently up at 180 days, full, (meaning 100%) right of return, special prices and terms for any better placement or higher quantity stocked.

Even taking product on stock on a consignment base is practiced at various stages in the distribution circle. Some years ago, my Mexican distributor told me that Tower Records was only prepared to take special interest product on a consignment basis. When asked how this should work, my distributor was told: “Be satisfied that we do not charge for the place your product takes”. That’s the cruel reality, so, please, do not always blame your distributor when he asks you for a deal on commission basis.

Your product has turned into money only when any consumer has bought it and not returned it later to the shop because he did not like it, or, indeed, having copied it onto a recordable disc.

SPECIAL FEATURES

A magic word in the chain of values is Add-On. All DVDs provide special features as extras, whether it’s an interview with the film’s director, actors, or special scenes, etc. Many of your films may not lend themselves to similar additions. Such extras may simply not exist or you may not have a budget for add-ons. But the extras factor is an important one that serves to increase the value of your production and makes it more attractive.

You can help yourself in this regard. You may well recount for the camera personally how the idea for your film was born and how it grew. You could tell the viewer why you produced this film, what your intention is. You could present the difficulties that occurred during production or funny anecdotes surrounding the production. If subject of the film allows, why not add a game? Modern flash animation would handle that proposition perfectly.
The question of quantity or length of extras is not the issue. Quality is of importance – and the simple reality that there your DVD features add-ons.

Underlining their value, extras are not only used for DVD film titles, but also in music releases. Interviews with musicians or video clips are added there, too. Consumers have become used to such bonus tracks and expect them today. so we are talking here about a concrete sales argument, not a gimmick!

PACKAGING YOUR DVD

The next element in the chain of values is packaging. It has an important role to play in answering the question : how is a consumer to be made aware of your film as it sits between all the others in shelves?

Many printers and product designers spend much time developing new forms of packaging. Beautifully designed, they compete hard for consumers’ attention. But the character of your film should be the guide for ‘correct’ packaging. It is not a sexist comparison when I refer here to a lady. As each lady tries to underline her image with clothes and make up, you need to underline the expression of your film by its packaging. I admit that some ladies are not 100% perfect in their efforts and, of colurse, similar experiences can happen to products, and not just in so-called packaged entertainment.
If your film leans towards the technical, then stay technical in packaging and colours. If it is a romance, then you can play around with fancy packaging and lovely colours in the artwork.

We in marketing love to talk these days about entire marketing models, provide for your product an entire character. If for some reason your film is in need of a degree of explanation, then make sure that it is given on the outer pages of packaging.

Please consider the three-second rule of modern marketing, adjusted here: When a product is in the hands of a consumer it takes just three seconds for that consumer to decide whether he/she is really interested or not. This simply means, the better that the introduction you provide clarifies the content, the more likely you are to stimulate fascination and increase preparedness to buy.

Years ago, I was marketing a four CD box set, packed in a thick double jewel box with four trays. In over six months on the market there were no sales, just returns. Then, in desperation, we decided to re-package the box set into four simple jewel cases with a carton wrap around. Result was more weight, taking more space on retail shelves – and the whole stock sold out within four weeks. This box set went on to sales success in sales for the next two years – a perfect example of how the right packaging directly influences sales and your cash flow. The packaging of your product must meet the expectations of the consumer!

PUTTING THE DVD ON SHELVES

Let’s look at stores and their buying attitudes. Most shops have standardised shelves today. If the packaging of your product does not fit in such a shelf, then the store, your product and you have a problem.

You may be lucky and for some reason you may get a special placement. But be assured that in most cases odd-ball product risks rejection by store buyers. The best you can hope for is one of those rare special places. But don’t expect a buyer to crank up the copy-depth to three or four units, most likely they will want to restrict the order to one unit per store. No big difference? Just think about chains with several hundred outlets, then it is a huge difference. What about petrol stations, food stores, etc.?

If suitable for one of these market segments, just reflect on your personal damage when your film is not taken simply for a ‘wrong’ size of packaging!
An important aspect is production cost. Any standard packaging is packed by machines. But in the DVD business this reduces the options to Amaray-sized boxes. All other packaging is generally by hand with substantially increased manufacturing cost. Of course Digipacks and other similar, non-standardised packaging are more expensive, too.

I am absolutely not against different packaging, quite the contrary. But it is necessary when making decisions to carefully reflect on sales expectations in order to achieve the best return of investment (ROI).
Imagine a well-presented shop. Hundreds of DVDs are on the shelves, one behind the other. It was always my conviction that if a product is picked up by a consumer then you are 30% along the way to getting that product sold.
When it is an eye-catcher, then you multiply your chances exponentially.

Eye-appeal starts with a front position on the shelf. Store managers from time to time have to reorganise their shelves in order to look different as a means of keeping returning customers interested. An attractive product therefore assists the store by making the choice of front-of-shelf product easier and provides your title will an advantage over the competition.

INTERNATIONAL MARKETS

Looking at the international markets, one of the key advantages of a DVD is its multi-lingual capability. And you would be wise to consider this aspect of a DVD’s marketability when considering any text on packaging and other printed material.

The smartest move is to create different packaging for different markets. But to afford this if you are dealing with a relatively small quantity of discs is a financial problem. You may solve this by a stripe around the box, over the cellophane. This helps a lot but it is not a real solution. The best course of action may be to discuss the challenge with your local distributor.

As will have been noted, getting sales in the world of package media is a delicate balance between cost, stocking and attractiveness.

Our assumption now is that you have a highly attractive product, well-prepared for the markets. Next assumption is that it will need a guide to the markets and the multi-channel ways it can be distributed.

Distribution has to be achieved. Your choice is between a general distributor who is able to supply your product to many countries in the world, or an individual distributor that you must find for yourself for each territory in which you wish to market your title. The latter is a more difficult way, taking time and bearing a great many disappointments. On the other hand, to be totally effective internationally, a general distributor needs to have developed near-perfect relationships with its partner-distributors in other markets.

However you decide, take a close look at the key markets for your product first. Ask yourself: Where will your product have quantitatively the best chances? This can help you decide which of the two opportunities for distribution that you should take.

If you grant distribution on a territory-by-territory basis, you will avoid ‘standing on one leg only’. You are more independent, flexible and in control. Changing an individual distributor who is lazy or unreliable does not mean you cut off your product from all markets because you decide that your production needs better opportunities in one particular territory. Also, if something goes financially wrong with your exclusive distributor, your personal loss will be smaller. The immediate consequences that may arise from such a development are less than those you would face if a sole distributor ran into financial difficulty.

Realistically, finding the right distributors in many different countries needs time, therefore money and, often enough, expertise in foreign trading terms. You ship your products into a country, perhaps several thousands of miles away, to a company run by individuals that you had never met. Who guarantees that you will get paid, that the initial order you are so proud of is not actually being used as a base for piracy? Nobody!

To get advance payments or letters of credit from an independent is in a rarity. Export insurances are expensive. And recommendations may be comforting but they are simply no guarantee.

And you will have black sheep within your distributor list, no doubt. They may be merely lazy or they may find it more difficult to convince buyers to take your product than expected, a scenario which then finds them moving quickly to products taken more easily by the stores.

Please do not forget that salesmen everywhere earn a considerable percentage of their salary by commission, have to meet targets set by their employer, and finally act as human beings: Salespeople will always take the line of least resistance.

Influencing sales activity when working with various distributors is difficult and requires permanent communication. Sales arguments that representatives are primed to use when they approach buyers need to be organised and presented in an attractive form. Otherwise they will not be read. By marketing through a single distributor you do this work only once.

WHO TO TALK TO?

But nonetheless you must be assured that his salesmen works hard for your product and that the distributor provides the right expertise and resources.
But to whom you should address your attentions? It is not always the biggest name that is the best for your product. You take a big risk of getting lost if you are offering a small choice of DVDs within a large catalogue being pushed by a distributor. Often enough, smaller, more specialised distributors, do a far better job. There is often more enthusiasm and less pressure by superiors and, importantly, more time to deal with special product.

Try to collect information on the experience of third parties that have used the distributor you intend to make an offer to. This is no guarantee since each DVD is different, but it helps a lot.

It helps, too, to become aware of how your distributor(s) work. The more you know about them the better you can individualise all information you provide, the more you can create an attractive context which makes your DVD something important within a catalogue.

In marketing, we talk about an improved market offer. Such a market offer can boost your production beyond your expectations. Don’t duck out of putting effort or investment into this. Ask what you can do in order to make your DVDs appear important and by which means you can help to increase sales. Such a policy will pay off.

PRICING AND TERMS

As mentioned earlier, distributors are under pressure from their clients who impose tough terms. It’s been many years since a seller decided terms. Today, clients decide what they pay, which terms they are prepared to accept – not only in entertainment industry, in all industries.

Consignment has somehow become a magic word. At the end there is no difference between consignment or right of return. Whether you accept consignment, or returns are deducted later, makes no difference. The only difference is in cash flow. Therefore, be financially prepared. This will happen to you. Personally, I can’t see how you can avoid return or consignment, most times it will be even both. No acceptance, no deal!
If you have any influence over the sales price of your disc, make sure that your DVD is ‘well priced’. Price and quantity sold are in direct relation. Too cheap is as wrong as too expensive. Too cheap signalises that your DVD has no value, too expensive repels.

But a correct price does not help at all, if any of the parties involved in getting your DVD title to a customer adds too high a margin. If you think this is happening, interfere, make a fuss and try to correct the situation.
Correct pricing based on market context can easily be checked by comparison to similar DVDs in shops. Consider that any party between you and consumers will add a margin of 30% on average to the price paid for it. With reverse-calculation from consumer price back through the supply chain, you can estimate the returns each party is getting.

To be asked for terms that are difficult to accept, does not automatically mean that you are talking to a bad distributor. Look at it from the other side, it can be the expression of a company that understands its business and protects its standing in the market. Avoiding financial risks with you – as seen from a distributor’s perspective – is somehow avoiding risks for yourself. You are part of the distributed family. A financial loss by other products may have consequences for you, of course. And this without having ever seen the other producer, his DVD, or his catalogue.

But in your own interest make sure that you get regular reports: About sales, average prices achieved, special campaigns made with your product, how many accounts your distributor serves and, where appropriate, how many accounts your distributor’s local distributors serve, which market segments are covered, how are sales per representative, etc. Read this information carefully. This will help to decide whether, at some stage of your business relationship, you need to look for an alternative distributor.


Klaus Oestreicher joined the music industry in 1981. Until early 2001, he was Sales and Marketing Director for several European and international labels. At Deluxe Video Services, Klaus was responsible for the customer services teams in various European countries. Since February 2003 Klaus is Head of Business Development and Marketing at CDA....

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