Rental stores experiment with digital copy

Feature can cause customer confusion

By Susanne Ault -- Video Business, 9/12/2008

SEPT. 12 | Digital copy, a DVD enhancement created for consumers who buy movies, is creating challenges and opportunities for rental retailers.

The digital movie files that studios are increasingly embedding on DVDs generally carry copy protection that limits the number of users and devices the file is available to. As rental stores rent DVD copies multiple times, many are grappling with how best to present releases with digital copy.

Seattle’s Scarecrow Video and Redmond, Wash., chain DVD Now!, for instance, try to avoid ordering two-disc packages that contain digital copy options and stock for rental only single-disc, film-only versions when possible.

If no single disc is available, Scarecrow and DVD Now! break apart the two-disc copy-enhanced set and just rent the main film disc. When the rentailers are ready to sell the copies as previously viewed, they pop the extra, digital-copy-embedded disc back into the package along with the feature film disc for the sale.

Video Buyers Group is trying another approach. About 200 VBG member stores also break apart the embedded two-disc sets, but they rent out the disc that features the main film and then sell the disc featuring the copy separately for $7.

“We’ve been doing this over the last four months, and we’re seeing some fairly good results,” said VBG president Ted Engen. “And now in the fourth quarter, we’ll be getting more and more titles with digital copy.”

Breaking up disc sets can be a tricky matter when a title’s second disc contains both the digital copy and additional bonus features that rental customers might want to watch.

Scarecrow rented the full two-disc, copy-embedded set for 20th Century Fox Home Entertainment’s Juno but had problems with customers.

“Customers were confused because they said they couldn’t access the digital copy,” Scarecrow buyer Mark Steiner said. “But then a lot of stuff was on the second disc.”

Several upcoming three-disc special editions, such as Walt Disney Studios Home Entertainment’s WALL-E and The Chronicles of Narnia: Prince Caspian and Universal Studios Home Entertainment’s The Incredible Hulk, have the digital copy alone on a third disc, which should make it simpler for rentailers to rent the film and all other bonus features, while separating out the digital copy.

Overall, Steiner said that Scarecrow customers are not yet requesting digital copy.

DVD Now! customers have similarly low interest, and the chain generally tries to avoid offering the digital-copy-embedded SKUs for sale as well as for rent, said owner Tom Paine. But he is willing to incorporate digital copy into his sales offerings if customers ask.

“With a choice, we go with the single SKU, and if customers start demanding it, we will go with digital copy,” said Paine. “We always go with the customers.”