Bill Castle, director of music and video at Barnes & Noble, is an outlier in an industry increasingly dominated by digital formats. While many retailers are reducing their physical media footprint, Barnes & Noble is doubling down on DVDs, Blu-ray Discs, and 4K Ultra HD titles. In June 2023, the bookstore chain began expanding its inventory of Criterion Collection products in select stores, and in February, they announced the rollout of branded Disney sections, offering a wider assortment of titles. Castle emphasizes the importance of offering a broad selection, aiming to cater to the diverse preferences of their customers.
Barnes & Noble's strategy contrasts sharply with the industry trend. Major retailers like Walmart and Target have reduced their physical media sections, with Walmart cutting back by 20% and Target eliminating endcaps for DVDs and Blu-rays. Best Buy and Ingram Entertainment have exited the disc business entirely. Yet, Barnes & Noble continues to invest in its stores, supported by knowledgeable booksellers who help customers find their next favorite album or movie.
Crissi Bariatti, senior manager for music and video at Barnes & Noble, underscores their strength in assortment, offering a wide range of titles from British TV shows to blockbuster hits. She notes a growing interest in 4K and Steelbook editions, reflecting a broader trend where customers are returning to physical media for its tangible appeal and collectability. The physical format offers a permanence and reliability that digital streaming cannot match, a sentiment echoed by many enthusiasts.
Despite the digital shift, the retail disc business remains resilient. E-commerce sales are rising, with studios and independent suppliers finding alternative brick-and-mortar channels. Video game retailer GameStop and grocer Fred Meyer have boosted their disc inventories, with GameStop dedicating space to a video wall for discs. This resurgence is partly fueled by the collectors' market, driving a flurry of anniversary and 4K reissues from independent distributors like Kino Lorber and Shout! Studios.
Eddie Cunningham, president of Studio Distribution Services, is optimistic about the longevity of the disc business. He notes that while physical media's market share has declined, the rate of decline is slowing, suggesting a stabilizing trend. Dedicated consumers appreciate the benefits of owning physical content, ensuring the category's sustained viability. The physical market's trajectory has improved significantly, with recent declines softening to around only 5%.
E-commerce has played a crucial role in keeping physical media alive. Doug Olzenak, president of Allied Vaughn, notes that e-commerce accounted for 44% of packaged-media sales in 2022, a figure expected to rise as brick-and-mortar space for discs continues to shrink. Carlos Franca, VP of e-commerce sales and operations for Alliance Entertainment, highlights a resurgence in disc sales through online channels, driven by collectible editions like Steelbooks and 4K titles. The pandemic accelerated this trend, pushing more consumers toward online purchases.
Brick-and-mortar retailers are not disappearing, however. New players are constantly entering the market. Studio Distribution Services recently announced direct retail relationships with Fred Meyer and GameStop, expanding their disc offerings in stores and online. Record stores have also seen growth, driven by the resurgence of vinyl LPs. Alliance Entertainment, as a preferred Record Store Day distributor, provides independent record stores with unique offerings, supporting both vinyl and other disc formats.
Ken Glaser, SVP of sales for Alliance Entertainment, notes the importance of physical retail stores, particularly those supporting the local community. Shout! Studios' John Rotella adds that Walmart has committed to exclusive Steelbooks and custom products, stepping up in the wake of Best Buy's exit. Barnes & Noble, recognized for their extensive media selection, has also seen growth, opening new stores and expanding their disc offerings, especially during sales events.
Marketing efforts for physical media have adapted to the digital age, with a focus on social media and influencer campaigns. Alanna Powers, SVP of worldwide marketing for Paramount Home Entertainment, emphasizes the importance of engaging with enthusiasts through social media. This strategy allows studios to create targeted campaigns, fostering a sense of community and loyalty among collectors. In-store promotions, once a primary marketing tool, remain relevant, with retailers like Walmart hosting signing events and exclusive promotions.
Despite the digital shift, the enduring appeal of physical media persists. Firms like Barnes & Noble, GameStop, and Walmart are investing in the future of discs, catering to collectors and enthusiasts who value the tangible, collectible nature of physical formats. As the industry continues to evolve, the resilience and adaptability of physical media retailers suggest a promising future for discs in the digital age.
