Home Video Essentials Takes The Pulse of Game Rentals

Electronic Gaming Business, Nov 17, 2004

This is the last time we're going to say this -- no, really, it is -- the video rental store channel is a woefully under-utilized venue that could be a powerhouse for video games promotion. With more than 18,000 rental stores on the ground in people's neighborhoods, they represent a tremendous opportunity to reach consumers much more often than a specialty game location or even the big box stores. "The video rental stores have a captive audience with engrained behavior from 25 years of people walking through their doors, and the possibilities are endless for them to create innovative offerings for their existing customers," says Brad Hackley, vice president of business development for Home Video Essentials at Rentrak.

Rentrak just released version 2.0 of its Home Video Essentials Industry Data Service, a Web-based suite of rental tracking tools for video and games vendors. Several months ago, Home Essentials started offering game rental tracking, and the Microsoft Xbox group became the first customer. The service gives game publishers and hardware vendors access to the top 1,000 video game rentals, updated weekly and available any time via a Web-based console.

The weekly figures are extrapolated from a sample of 3,000 to 5,000 of the 18,256 video stores in the industry universe. Version 2.0 also adds data from the Canadian territories and some online rental venues.

Home Essentials 2.0 tracks the usual data points for games -- weekly turns and revenue, and cumulative revenue by platform. It also offers market share analysis, which is what attracted Microsoft to the product. Home Essentials can show publisher share based on their affiliations with titles. "Based on title revenue and platform code, we can extrapolate market shares by platform every week and year-to-date," says Hackley. In fact, within the rental venues, Microsoft Xbox's share has grown to a remarkable 28% of the games rental market, according to Home Essentials.

Hackley thinks that tracking weekly rental activity gives games marketers the pulse of interest in their product. In fact, since NPD Funworld's sales data for consoles is issued only on a monthly basis, and often weeks after the close of the month, the weekly rental reports are often the closest thing to real-time market reporting the industry has available.

Moreover, as we have noted in these pages, rental activity also reveals interesting patterns of lingering interest in titles that don't show up in retail reports or show up too late for marketers to act upon. In the past year for instance, games like Manhunt and Red Dead Revolver showed tremendous longevity in the rental outlet after falling off the sales charts.

This suggests that the rental venues could be used to extend that short window of sales opportunity the industry suffers in the traditional retail stores or it can help publishers identify catalog titles that might benefit from aggressive discounting and follow-up promotion or bundling with other titles at retail. The low price barrier of a rental gives gamers the opportunity to experiment with and discover titles they overlook at full price.

A Home of Its Own

For the time being, the video game data is housed within the larger video rental system, but Rentrak intends to segregate it over the coming months into a separate system. Ultimately, the game database will also be surrounded by industry information.

Rentrak will begin looking at new data points to add to the game rental reporting mix, perhaps including regional reporting by TV markets, so that marketers can detect hot and cold spots for specific titles geographically.

Toward a DVD Model?

Despite the popularity of video game rentals and sales through this channel, the games publishers themselves remain aloof from the models that have helped propel the VHS and DVD industries. For instance, DVD rentals have declined in the past few years as studios and consumers embrace buying their movies. Thus the video rental venues shifted their economy more toward selling "previously viewed" DVDs. The stores now buy a large number of copies of a new hit release, put only part of the inventory on the rental shelf and shrink-wrap the rest as "used."

The system works for studios and retailers because of a revenue share agreement that keeps the cost of goods low for the chains but lets the publisher make money from the "re-sale" market. Rentrak, which also distributes media into the retail channel, has been offering a revenue share arrangement to games companies for some time, but most publishers are still circling around the model.

"If they stepped back and looked at the video store market the way Hollywood does, they could sell 20 copies of Grand Theft Auto at a discount, rent half and shrink-wrap half to sell," says Hackley. "We're hearing rumbles that they want to augment sell through, and more publishers are stepping forward to discuss revenue share deals with us."

Rentrak also intends to move into the game sales tracking market soon, which NPD now dominates and Nielsen persistently threatens to challenge. The company is discussing with retailers getting data feeds for a Retail Essentials product sometime next year.