Best Buy to Discontinue Physical Media

[BatteryMill]

Not sure why this thread hasn't been made yet...

Best Buy is discontinuing their DVD and Blu-ray collection. This change takes effect as of Q1 2024, across Best Buy's physical and online operations. It follows after their 2018 discontinuation of the compact disc format.

This does leave questions, as this is a shocking change. Where will both BB and the home video market go from here?

As for my personal thoughts, perhaps one of the worst decisions in the history of retail, and a loss for the entertainment industry. I don't want to move on to a 100% streaming media world because it's just not the same, and especially as streamers have been through rough periods (removing shows), I wouldn't want physical media to go obsolete because Best Buy started a domino effect across retail. I do hope this change is reversed.

[storewanderer]

Even if this category generates few sales for Best Buy, how much foot traffic is it generating? Taking it away gives people one less reason to go to Best Buy.

I understand trying to keep the store feeling modern/with the times, and maybe Best Buy feels having this type of dinosaur physical media in the stores is something that adds a dated feel to the store, having these physical objects in the store creates clutter/waste, etc., but there comes a point where you need to balance what brings in foot traffic with those other considerations.

I doubt other stores will follow suit, and this move will only drive Best Buy further out.

Ultimately if the studios decide no more physical media, that will be what does it in. So far they may push streaming but they don't force it...

[mjhale]

I always purchase physical media for movies and shows that have great meaning to me. That way I can watch the content at any time without regard to what streaming service has the content, what contract expired or who is arguing with whom over content. Unfortunately, Best Buy is probably going with the herd mentality of everyone streams and no one cares about the content anymore once it has been watched once. Check off the box and move on. Best Buy is just giving more business to online sellers who still sell physical media. There is still (believe it or not) an FYE near me that has a large DVD and CD section. I like just going in an seeing what they have, you know the old browsing like we used to do at Tower Records. I've found some real gems at FYE. I guess for everything else I will have to get the media from Amazon. Oh I've been doing that anyway. Haven't been in Best Buy in two years since I bought my last TV. And before that I can't remember. No wonder Best Buy is swirling the drain.

[Romr123]

Knowing nothing about the sales structure of physical media, has there been a change in the terms for how it's handled? Did it formerly operate on a jobber/consignment basis which is no longer supported by distributors? Seems a bit dumb of them to take things further away from the retail experience unless they can no longer operate under the model which they are accustomed to.

[mbz321]

I doubt other stores will follow suit, and this move will only drive Best Buy further out.

What other stores have physical media left though? Target doesn't really have much of anything anymore besides maybe some new releases. Walmart has a so-so selection but that has also been reduced over the years (both have added a small selection of vinyl though, but thats still a niche market). Any newer FYE store seems to be like 95% collectables/candy/etc. I guess Barnes & Noble might still have some music? (Haven't been in one in years).

Physical media is definitely a dying breed. Even GameStop is pretty much a dead-retailer-walking these days, as most games can be downloaded at home.

[ClownLoach]

Knowing nothing about the sales structure of physical media, has there been a change in the terms for how it's handled? Did it formerly operate on a jobber/consignment basis which is no longer supported by distributors? Seems a bit dumb of them to take things further away from the retail experience unless they can no longer operate under the model which they are accustomed to.

This I believe is the problem, the model is no longer cost effective to give stores full return rights and redistribute unsold product which causes stores to need to eliminate the "catalog" of media and reduce to just new releases. I got my retail management start in media, CDs and DVDs where I was the supervisor of that department along with boomboxes and walkmen and cordless phones. We would have pullbacks monthly where hundreds, sometimes thousands of slow selling or not selling units were sent back to the vendors for full credit. It was a quasi-consignment setup where the distributor who serviced our main catalog took back everything. New releases usually arrived either from the same distribution company or via DSD (UPS/FedEx direct from the studio's manufacturer-distributor).

In my experience which goes back over 20 years the vast majority of CD and DVD sales are new releases in their first 30 days, about 60%. The next 30% are "sale items" or special buy loss leaders that you used to see on a page in the printed circular for $9.99 or so that were usually former big summer blockbusters. I'm sure that was all deal making behind the scenes between the distributor and the store even though they wouldn't always be sending more media and sometimes the sale was just what was physically on hand. Usually all that would go on an endcap or a dump bin by the checkout lanes as impulse buys.

The aisles and aisles and aisles of everything else made less than 10% of the sales and hardly justified the extensive labor cost to keep them alphabetized and recovered... And that was back when minimum wage was $5 and change!

One of the reasons why many stores no longer have CDs, DVDs, or books and magazines is that many of these distributors and vendors have closed. The few remaining have trouble staffing and won't take on new customers, this is why new incremental build Costco stores don't sell books because the vendor they use won't take on any more stores (relocations which are most Costco new stores don't count).

I believe Walmart recently acquired one of the last remaining physical media distributors and I wonder if they were handling this for Best Buy... That could be a reason. Pretty sure most of the "pulled back" discs were sold to Walmart for their infamous dump bins of $2 DVDs anyway.

I HIGHLY doubt that they will truly pull 100% of physical media either, they'll leave a few endcaps of the new releases and best sellers. That means they'll be able to repurpose 95% of the space but they'll only lose 40% of the sales.

Everyone else who has supposedly "exited" physical media has done the same, removed the entire catalog and whatever new releases haven't sold out but have stopped moving get a hard markdown with the other clearance instead of getting sent back. Target said they had exited CDs years ago but still has an endcap and frequently has special edition releases of major albums including exclusives with Taylor Swift.

[BatteryMill]

Even if this category generates few sales for Best Buy, how much foot traffic is it generating? Taking it away gives people one less reason to go to Best Buy.

I understand trying to keep the store feeling modern/with the times, and maybe Best Buy feels having this type of dinosaur physical media in the stores is something that adds a dated feel to the store, having these physical objects in the store creates clutter/waste, etc., but there comes a point where you need to balance what brings in foot traffic with those other considerations.

I doubt other stores will follow suit, and this move will only drive Best Buy further out.

Ultimately if the studios decide no more physical media, that will be what does it in. So far they may push streaming but they don't force it...

So far it seems the consumer backlash has increased on social media, with many commenting their disapproval of the industry and predicting BB will further spiral downwards. Barnes & Noble has stated they will continue offering physical media.

That being said, even if there is great value to stop having a full DVD selection, a small display by checkouts would get the job done and appease steelbook collectors.

Good point about the studios deciding on their own. However I think it might happen if Best Buy sees success in dropping DVDs and other retailers latch on for similar reasons.

This I believe is the problem, the model is no longer cost effective to give stores full return rights and redistribute unsold product which causes stores to need to eliminate the "catalog" of media and reduce to just new releases. I got my retail management start in media, CDs and DVDs where I was the supervisor of that department along with boomboxes and walkmen and cordless phones. We would have pullbacks monthly where hundreds, sometimes thousands of slow selling or not selling units were sent back to the vendors for full credit. It was a quasi-consignment setup where the distributor who serviced our main catalog took back everything. New releases usually arrived either from the same distribution company or via DSD (UPS/FedEx direct from the studio's manufacturer-distributor).

In my experience which goes back over 20 years the vast majority of CD and DVD sales are new releases in their first 30 days, about 60%. The next 30% are "sale items" or special buy loss leaders that you used to see on a page in the printed circular for $9.99 or so that were usually former big summer blockbusters. I'm sure that was all deal making behind the scenes between the distributor and the store even though they wouldn't always be sending more media and sometimes the sale was just what was physically on hand. Usually all that would go on an endcap or a dump bin by the checkout lanes as impulse buys.

The aisles and aisles and aisles of everything else made less than 10% of the sales and hardly justified the extensive labor cost to keep them alphabetized and recovered... And that was back when minimum wage was $5 and change!

One of the reasons why many stores no longer have CDs, DVDs, or books and magazines is that many of these distributors and vendors have closed. The few remaining have trouble staffing and won't take on new customers, this is why new incremental build Costco stores don't sell books because the vendor they use won't take on any more stores (relocations which are most Costco new stores don't count).

I believe Walmart recently acquired one of the last remaining physical media distributors and I wonder if they were handling this for Best Buy... That could be a reason. Pretty sure most of the "pulled back" discs were sold to Walmart for their infamous dump bins of $2 DVDs anyway.

I HIGHLY doubt that they will truly pull 100% of physical media either, they'll leave a few endcaps of the new releases and best sellers. That means they'll be able to repurpose 95% of the space but they'll only lose 40% of the sales.

Everyone else who has supposedly "exited" physical media has done the same, removed the entire catalog and whatever new releases haven't sold out but have stopped moving get a hard markdown with the other clearance instead of getting sent back. Target said they had exited CDs years ago but still has an endcap and frequently has special edition releases of major albums including exclusives with Taylor Swift.

Out of these media plaforms is strange seeing books fall out of favor with distributors since their would-be replacements, e-books, have had a smaller adoption rate than music/video streaming and the magazines' websites.

It is also noteworthy to talk about the difference between collectors and casual CD buyers. Target has a handful of standard CD albums but the gravy is still with the collectors' edition boxsets that Taylor and Kpop juggernauts get.

[ClownLoach]

Even if this category generates few sales for Best Buy, how much foot traffic is it generating? Taking it away gives people one less reason to go to Best Buy.

I understand trying to keep the store feeling modern/with the times, and maybe Best Buy feels having this type of dinosaur physical media in the stores is something that adds a dated feel to the store, having these physical objects in the store creates clutter/waste, etc., but there comes a point where you need to balance what brings in foot traffic with those other considerations.

I doubt other stores will follow suit, and this move will only drive Best Buy further out.

Ultimately if the studios decide no more physical media, that will be what does it in. So far they may push streaming but they don't force it...

So far it seems the consumer backlash has increased on social media, with many commenting their disapproval of the industry and predicting BB will further spiral downwards. Barnes & Noble has stated they will continue offering physical media.

That being said, even if there is great value to stop having a full DVD selection, a small display by checkouts would get the job done and appease steelbook collectors.

Good point about the studios deciding on their own. However I think it might happen if Best Buy sees success in dropping DVDs and other retailers latch on for similar reasons.

This I believe is the problem, the model is no longer cost effective to give stores full return rights and redistribute unsold product which causes stores to need to eliminate the "catalog" of media and reduce to just new releases. I got my retail management start in media, CDs and DVDs where I was the supervisor of that department along with boomboxes and walkmen and cordless phones. We would have pullbacks monthly where hundreds, sometimes thousands of slow selling or not selling units were sent back to the vendors for full credit. It was a quasi-consignment setup where the distributor who serviced our main catalog took back everything. New releases usually arrived either from the same distribution company or via DSD (UPS/FedEx direct from the studio's manufacturer-distributor).

In my experience which goes back over 20 years the vast majority of CD and DVD sales are new releases in their first 30 days, about 60%. The next 30% are "sale items" or special buy loss leaders that you used to see on a page in the printed circular for $9.99 or so that were usually former big summer blockbusters. I'm sure that was all deal making behind the scenes between the distributor and the store even though they wouldn't always be sending more media and sometimes the sale was just what was physically on hand. Usually all that would go on an endcap or a dump bin by the checkout lanes as impulse buys.

The aisles and aisles and aisles of everything else made less than 10% of the sales and hardly justified the extensive labor cost to keep them alphabetized and recovered... And that was back when minimum wage was $5 and change!

One of the reasons why many stores no longer have CDs, DVDs, or books and magazines is that many of these distributors and vendors have closed. The few remaining have trouble staffing and won't take on new customers, this is why new incremental build Costco stores don't sell books because the vendor they use won't take on any more stores (relocations which are most Costco new stores don't count).

I believe Walmart recently acquired one of the last remaining physical media distributors and I wonder if they were handling this for Best Buy... That could be a reason. Pretty sure most of the "pulled back" discs were sold to Walmart for their infamous dump bins of $2 DVDs anyway.

I HIGHLY doubt that they will truly pull 100% of physical media either, they'll leave a few endcaps of the new releases and best sellers. That means they'll be able to repurpose 95% of the space but they'll only lose 40% of the sales.

Everyone else who has supposedly "exited" physical media has done the same, removed the entire catalog and whatever new releases haven't sold out but have stopped moving get a hard markdown with the other clearance instead of getting sent back. Target said they had exited CDs years ago but still has an endcap and frequently has special edition releases of major albums including exclusives with Taylor Swift.

Out of these media plaforms is strange seeing books fall out of favor with distributors since their would-be replacements, e-books, have had a smaller adoption rate than music/video streaming and the magazines' websites.

It is also noteworthy to talk about the difference between collectors and casual CD buyers. Target has a handful of standard CD albums but the gravy is still with the collectors' edition boxsets that Taylor and Kpop juggernauts get.

The speculation is that the distributor Best Buy used was indeed the same one that Walmart acquired, so this might not be within their control. There are pictures in recent Yelp and Google reviews indicating that the movie shelves have been mostly empty for several months now at Best Buy stores, and they are not even receiving or stocking new releases on time. If I had to guess, they eliminated whatever hourly employees would have maintained these areas in the past and left stocking of the product to "whoever gets around to it" which basically indicates the category is dead.

Having said that, just like Target and their collectible version CDs and such I expect Best Buy will find a way to make arrangements for new releases and such on an endcap as I mentioned before, although it appears that distribution is really becoming cut off and somehow Walmart owning the last standing distributor might impede RTV rights and Such. Yes there is a physical piece of merchandise but the deal with media whether it's games, movies or books is that the price is for intellectual property and not so much the media itself which is produced cheaply and thus the need for aggressive RTVs for unsold product that would otherwise take up space needed for more productive incoming new content. In short, the stores always get more discs or books than they'll ever sell and that's just part of this business which is very different from any other retail product.

Without the full RTV rights for unsold media it is not worthwhile to sell it at a retail store based on my years of experience with the category - it shifts the burden for unwanted and poorly performing movies onto the retailer even though the studio distributors currently have near unlimited rights to ship new releases in whatever quantity they want in an effort to prevent sell outs. I recall some Disney movies getting over a thousand copies per format, and The Incredibles being possibly the biggest release ever in that age of physical media with multiple pallets of disc's and long lines at checkout.

I suspect there will be enough of a fuss publicly that there will be some behind the scenes push back that Walmart is acting like a monopoly and cutting off Best Buy (as is being speculated) is anticompetitive and must be halted. I also smell a rat, Amazon, in the mix as they've carefully interjected themselves and taken over the exclusive "steelbook" business which is frankly what drives Best Buy's movie collectors to the stores and that is also anticompetitive behavior.

Again I strongly believe that this will ultimately fix itself and there will not be a true 100% cull of the category which for all intents and purposes has been gone for a while now at the broad category level, rather the most productive/least space intensive part will remain, new releases which again fit on an endcap.

And what is going in the space? Best Buy has been remodeling stores for a couple years now to what I laighingly call the Circuit City format. They're cutting the sales floor by a third, walling off space for a large warehouse where boxes for big items like TVs and appliances live along with high shrink items like laptops and tablets which used to all live on the floor in cases or pallet racking. Then the floor becomes more of a showroom where the customer pays for the expensive items at registers scattered throughout the store in the departments, and takes their receipt to a pickup counter or drives up to a loading dock driveway to receive the box. It's quite literally the 2001-era Circuit City store format minus the aisles and aisles of CDs and DVDs and video games they had just added to replace major appliances. They are also experimenting with some exercise equipment, patio goods like Traeger smokers, and other such goods that all have received digital remakes (similar to Peleton exercise equipment with screens).

My guess is that they're working on a cheaper way to remodel these stores versus the long, arduous projects they've been doing which actually close the store to customers for up to 6 months as they fully rebuild inside (!!!) and the key is to free up the large media space. With shrink problems and e-commerce, it's become obvious that Circuit City was ahead of its time by 20+ years. As soon as Best Buy vanquished them, mysteriously they began a slow march to becoming them. Ironically few retailers have ever achieved the technological capabilities Circuit City had on their ancient black and white screened system that gave them national, real time "omnichannel" capabilities before that word was invented.

[Romr123]

Sounds a little like how the FCC tripped up A&P in the 1940s/50s with them both self-distributing and earning commissions on produce (Atlantic Commission Company).

My husband formerly worked in-store 20 years ago for Target and for Tower Record, and is an audiophile, and echoes what you're saying. Handleman was formerly in MIchigan and distributed to KMart among others, but liquidated in 2008 apparently...

[ClownLoach]

Sounds a little like how the FCC tripped up A&P in the 1940s/50s with them both self-distributing and earning commissions on produce (Atlantic Commission Company).

My husband formerly worked in-store 20 years ago for Target and for Tower Record, and is an audiophile, and echoes what you're saying. Handleman was formerly in MIchigan and distributed to KMart among others, but liquidated in 2008 apparently...

I remember Handleman, they were one of the vendors Circuit City used. I think they were only shipping product to CC and weren't the reverse logistics firm though. I do recall some albums not being available when they closed, new releases not coming in etc. I do not remember who the reverse logistics firm was that pulled back all the unsold media.