Escaping from the recession - Home videos and games are a popular way to forget gloom and doom.

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30th March 2003

TASK 7

Escaping from the recession

Home videos and games are a popular way to forget gloom and doom

Home entertainment has increased in popularity among Thais in recent times as the economy deteriorated and consumer spending dwindled.

Many home entertainment operators say sales of all kinds of entertainment products dropped dramatically in 1997 as the recession took hold. But only a year later, sales began to pick up with video rental and distribution businesses, in particular, gaining increased popularity.                 The quick turnaround is partly attributed to a widespread use of video, video compact disc (VCD) and digital versatile disc (DVD) players for use as a home entertainment.

Many video rental companies from overseas, including Tsutaya, Blockbuster and EZ Video, are trying to capitalize on the current wave.

They have been opening video rental stores throughout Bangkok and other cities as more people turn to video rental services.

         Padet Hongfa, managing director of CVD International Co, said that before the economic crisis, the company's total revenue from the video business stemmed from sales (70%) and rentals (30%). But that ratio has reversed.                                                                                         CVD International is a local producer and distributor of home videos for the Major Group and an operator of Showtime stores.

Mr Padet said video rentals would continue to dominate the market. His company plans to increase the number of Showtime outlets to 70 from 50 by the end of 1999.

To boost competitiveness, the firm has offered a franchise fee of 200,000 baht compared with 300,000 baht quoted by Tsutaya, another major provider of video rental services. The first group of target franchisees would be CVD video rental agents who want to reshape their shops to compete with chain stores from overseas.

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Mr Padet said video rental markets in Thailand had evolved in the same pattern as those in the United States.

Among those moving into the rental business was entertainment chain Mangpong Co, a local producer and distributor of home videos.

Director Yuttadech Vejpongsa said the company had experienced a sales slump since the baht was floated in mid-1997. It then changed its marketing strategy in early 1998 by setting aside space for video rental services.

Before the crisis, rental videos were popular with a handful of people. Most preferred buying videos and favourite movie titles at between ...

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