DVD, games to benefit from anti-theft technology

PHYSICAL: Increased sales, cost savings predicted to yield almost $7 billion

By Danny King -- Video Business, 6/22/2009

JUNE 22 | PHYSICAL: The DVD and videogame industries could achieve almost $7 billion a year in combined increased sales and cost savings by using anti-theft technology that would make products useless to people who steal them, Entertainment Merchants Assn. said today.

Retailers, movie studios and videogame publishers might see as much as a $6 billion boost in sales by using so-called benefit-denial technology, Los Angeles-based EMA said in a statement, citing a study conducted by consultant Capgemini. An additional $800 million in cost savings also would be achieved by using technology designed to reduce theft, or so-called shrink, EMA said, citing the study.

“If we can utilize emerging technology to reduce the shrink in the DVD, Blu-ray Disc and videogame categories and eliminate barriers erected to deter shoplifting, consumers will have easier access to the products, additional retail channels will carry these products and costs will be eliminated from the supply chain,” EMA CEO Bo Andersen said in the statement. “Now we know that literally billions of dollars in increased sales and cost savings can be realized with benefit-denial technology.”

Retailers are taking a closer look at ways to cut back on theft, which is accounting for a progressively larger percentage of a U.S. DVD industry that last year totaled $14 billion in sales, according to Video Business research and Rentrak, and a U.S. videogame industry in which 2008 sales were more than $21 billion, according to NPD Group.

DVD shrink, or theft as a percentage of sales, rose 16% in 2007, while videogame theft increased more than 20%, EMA said in October, prompting such companies as Target and Microsoft, in addition to Wal-Mart, Best Buy and Electronic Arts, to meet in September to explore ways to cut theft.

Last December, DVD and videogame retailers and publishers settled on a set of goals for anti-theft technology, known as “Project Lazarus.” It listed 21 requirements for benefit-denial technology, in which discs would be delivered to retailers in an inoperable state and activated once they’re sold to a customer. Requirements included having the inoperable discs use the same size packaging, take up no extra space or time upon checkout and require no action on the part of the customer.

Capgemini surveyed seven retailers, seven movie studios and videogame publishers, one wholesale distributor and one replicator for the study, whose results are likely to help EMA reach last year’s goal of having widespread rollout of a benefit-denial product by the end of 2010. Few methods are used to curtail DVD and videogame theft beyond electronic article surveillance tags, EMA said last year.

Clothing retailers have long used a method of “benefit denial” to cut theft by using so-called “alligator clips” that spill ink on the item if anyone other than a store employee removes the clip.