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  • Tsutaya's DVD Rental Biz Off to Good Start
  • January 7, 1998 (TOKYO) -- Business is brisk at two Tsutuya digital video disk (DVD) rental shops that started renting DVDs Dec. 19, 1997 in Shinjuku and Sangenjaya, Tokyo. From Japan
    The rental shops are operated by Culture Convenience Club (CCC) Co., Ltd.

    "We are expecting monthly sales to amount to one million yen (US$7,520), an initial target for a Shinjuku shop, if we can keep up the current pace of sales," said Fumio Kurokawa, president of Culture Publishers Inc., a CCC affiliate engaged in the contents business. Shinjuku is a major electronics district in Tokyo.

    "Besides, luckily, the DVD rental business promotes sales of DVD software products at the shop. Sales of DVD software products have tripled," Kurokawa added.

    Rentals of the 50 DVD players at the two franchise shops also has been active, with all players rented at some times. The two shops even had to prepare an additional 20 players. Many customers rented a DVD player with DVD software since the players are not yet widely used among Japanese consumers.

    When the Tsutaya rental video shops started the rental business, they had only 55 Warner Home Video titles. However, it is imperative for the chain shops to add more video titles to their lineups in order to expand the DVD rental business further, experts said.

    Kurokawa explained that his company has obtained approval to include MGM/UA video software in the lineups at the shops. The content company also is negotiating with other film companies with the aim of offering 100 rental video titles by the end of the month.

    DVD software developers are generally positive about the rental business, because it is easy to make sales estimates, said Kurokawa. He expects the shops to be able to offer 90 percent of DVD video titles by the spring of 1998.

    According to Kurokawa, DVD software developers such as movie companies are trying to take advantage of the rental service to boost sales of their software products. For example, the developers sell their software products at higher prices to rental shops. Some developers will start selling their products at the shops following success in the rental business.

    The DVD rental service was launched by CCC, operator of the Tsutaya franchise rental video shops. Manufacturers of DVD- related products expect the business to expand the entire DVD market. Sales of DVD players have been lower than initially projected.

    The rental business at the two shops in Tokyo is merely a pilot case for CCC.

    The company plans to increase the number of nationwide pilot rental shops for DVD products to 10, including a shop in Osaka, to gather fundamental data on the DVD rental business.

    The gathered data will be announced at a briefing session to be given to franchise shop owners scheduled to be held sometimes around March. After the session, the company will decide whether to start the rental business at about 920 other Tsutaya shops nationwide.

    (Nikkei Multimedia)

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    Updated: Tue Jan 6 21:57:10 1998