DVD, videogame theft on the rise

Retailers involved in EMA effort to develop deterrent technology

By Danny King -- Video Business, 10/30/2008

OCT. 30 | DVD shrink, or theft as a percentage of sales, rose 16% last year, while videogame theft increased more than 20%, prompting Wal-Mart, Best Buy, Target and many movie and game suppliers to meet recently to explore anti-theft methods that would make product useless once it’s improperly taken from stores.

DVD shrink last year was 1.47% of sales, up from 1.27% in 2006, while videogame shrink rose to 2.2% in 2007 from 1.8% a year earlier, according to the Entertainment Merchant Assn. About half of the videogames and 38% of DVDs were taken by store employees, EMA said, adding that theft levels of Blu-ray discs, which weren’t tracked last year, are “quite significant” this year.

“Whenever the economy is bad, pilferage, shoplifting and internal theft generally tend to increase,” said Mark Fisher, EMA VP of strategic initiatives.

Fisher said that, with rising gas prices, consumers already started feeling the economic pinch last year, and with the proliferation of auction Web sites, organized crime rings are able to set up shop at a number of sites even if they get kicked off of eBay.

“We’ve got industries growing by leaps and bounds,” he said. “There’s a lot of good and hot product out there, for both the casual shoplifter and organized shoplifting.”

Videogame store employees accounted for a larger percentage of theft than DVD store employees because many games titles are kept in glass cases behind lock and key.

“Videogame shrink is obviously a problem, otherwise it wouldn’t be behind glass,” Fisher said.

Both retailers and suppliers are taking a closer look at ways to cut back on theft. Among the companies at EMA’s two-day “Benefit Denial Summit” in late September were retailers including Best Buy, Target and Wal-Mart; and DVD and videogame suppliers including 20th Century Fox Home Entertainment, Activision, Electronic Arts, Lionsgate, Microsoft, Nintendo, Paramount Home Entertainment, Sony Computer Electronics, Sony Pictures Home Entertainment, THQ, Ubisoft, Universal Studios Home Entertainment, Walt Disney Studios Home Entertainment and Warner Home Video.

The companies are studying methods of “benefit denial,” a term that refers to theft-prevention methods that make an item useless to the person who stole it. For instance, clothing retailers use so-called “alligator clips” that spill ink on the item if anyone other than a store employee removes the clip.

The so-called benefit-denial technologies for discs would work in reverse of the alligator clips that stain stolen clothes, in that the discs would be delivered inoperable to the retailers and could only be changed into an “active” state by the retail clerk. Fisher declined to elaborate on how this technology would work.

EMA and the companies are looking to start testing benefit-denial methods by late next year, with a potential widespread rollout of an agreed-upon product by the end of 2010.

Currently, few methods are used to curtail DVD and videogame theft beyond electronic article surveillance tags, according to EMA.