Benefit denial tech could increase disc sales by $6 billion
Games could be only activated at point of sale, cutting down on theft, says study
A new study on behalf of the Entertainment Merchants Association in the US has found that 'benefit denial' technology could increase sales of videogame, DVD and Blu-ray products by as much as USD 6 billion.
Benefit denial is the concept of shipping products to a store in a disabled state and only activating them at the point of sale, cutting down on loss from theft.
"It is intuitive that, if we can utilise emerging technology to reduce the shrink in the DVD, Blu-ray discs, and videogame categories and eliminate barriers erected to deter shoplifting, consumers will have easier access to the products, additional retail channels will carry these products, and costs will be eliminated from the supply chain," commented Bo Andersen, president of the EMA.
"Until now, however, the lift in sales and reductions in costs had not been quantified and analysed. Now we know that literally billions of dollars in increased sales and cost savings can be realised with benefit denial technology."
The study, conducted by Capgemini, found that advantages of benefit denial can be grouped into three categories; revenue enhancement, cost savings and cost avoidance.
"The study projects that benefit denial technology will enable retailers to increase revenue from sales lifts from open merchandising, reduced out-of-stocks, new distribution channels, and legitimate sales replacing sales of stolen merchandise," offered Mark Landry, VP of Capgemini.
"The revenue enhancements would be spread broadly among retailers, studios, publishers, distributors, and replicators."
The study noted that cost savings and cost avoidance would come from decreases in inventory loss write-offs, returns, packaging costs, handling costs, burglary and supply chain losses, with the greatest savings for the retail community. As well as dropping security fixtures, the report suggested games would no longer need to be kept in locked cases – a method considered a deterrent to purchase.
Benefit denial is already employed in other areas of retail – the clothing industry uses a similar concept of attaching tags to clothing which leaks permanent dye if forcibly removed, while gift cards are not valid unless activated at a store counter.
The Entertainment Merchants Association's next step is to assess the costs of deploying benefit denial technology for DVDs, Blu-ray and videogames, and the organisation notes the technology could be in stores by the end of 2010.