Case Write Up - Video Vault

CASE WRITE UP - VIDEO VAULT

COMPANY BACKGROUND:

1. Rental co. with 10,000 titles including 600 DVD formats.

2. Enjoyed a good loction of the office.

COMPETITION:

1. Video Vault differentiated from Blockbuster, only competitor, thru personal touch point, good customer relationship.

2. They k now their customers well.

3. Better location than Blockbuster.

4. Due to changes in supply chain with the help of big retailers like blockbuster, prices from studios directly to retailers fell from 70$ to 40$.

5. Next big thing was Revenue Sharing by big retailers which changed industry paradigm.

6. Due to this cost per tape reduced to 3-8$.

REVENUE SHARING:

1. Distributor installed Point of sale data collectors to get informed about their revenue earning.

2. Rentrak software was used for this purpose & it became common during 2000.

DVD Factors:

1. Less cost to own than VHS & sturdy & higher clarity.

2. But due to DVD technology, lower cost to own & larger no. of titles it was difficult for Video Vault to estimate the quantities to own due to fluctuating demand - higher SKUs.

3. Several rental studios went to loses.

Video vault case

With the increase in competition in all the ways like Revenue Sharing agreements, unpredictable environment and new technology entrants, the industry has become more dynamic. With over 6000 registered loyal customers and proper positing of store and product mix in the store (covering the new releases and old classics) could help to pull the customer to the store but not always in future due to head to head competition.

In the industry where the demand is very short span and fluctuating demand, and especially when your competitors have more strong tie-ups, In order to sustain and compete with big organizations like blockbuster, the Video vault should also make the revenue sharing agreement with Rentrak will be the feasible best option as agreement with studios directly would be more cost intensive and can affect the topline in the balance sheet,

Once they tie-up with Rentrak, Depending on the ratings of the movie, they could order more prints than what they had done previously (3prints per 1000 customers)

Cost of each VHS: $8 (average)

Rental per each day: $4

No.

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