Prism Leisure: Geoff Young
Prism Leisure’s Geoff Young has gone from market trader to market leader in 20 years. But, as he tells us here, it was the introduction of DVDs that made a real difference to the now £100m company
Manning my market stall more than 20 years ago I found room for some ‘singalong’ records alongside the clothes racks.
It wasn’t long before music became the core constituent of the stall. The principles have remained the same, only the scale has changed.
DVDs have proved something of a watershed. Since my business pursued this avenue in 2000 the company’srevenues have rocketed from £35m to today’s figure which is just under £100m, largely thanks to DVDs.
Just as eight-tracks were outmoded by cassettes, and vinyl was left behind by CDs, it was inevitable that the DVD would replace the video. Once the industry commits to a format, that’s pretty much it. We were just better placed to exploit it and got in early.
Major film studios may be masters at shifting new releases without breaking a sweat, but when it comes to back catalogues they often lack the resources, inclination or expertise. My background is in exploiting titles once they’ve left the top sellers lists, if they ever made it, and selling them at the best possible price to the consumer.
I’ve done this successfully with music, computer games and films, picking up cult -interest titles with devoted followings.
So we had the distribution network needed. We invested the profits of 20 years in DVD movie licences, positioning us as a publisher and distributor. We now own 1,000 titles and have released 800 so far, with £5.99 – or two for £10 – as the main collection big sellers.
We also spent heavily on a new computer system, which reports back on sales flow and has EDI (Electronic Data Interchange) links to process documents between customers and us. Money also went into a new warehouse, now home to our category management merchandising operation, and stronger finance and IT departments. Staff numbers shot up from 130 two years ago, to 270 today. All in all, we’ve spent around £5m since DVDs arrived on the scene.
From the off, we realised the majority of consumers wouldn’t fork out £15.99 or more as the hardware didn’t have a mass reach. One of our first moves was to bundle the two. Once consumers have hardware they build a collection. In 2001 we sold 20 movies and a DVD player for £199. By 2002 we had the rights to enough films to offer 50 and a machine for £149. This year we’ve got the price down to £99, driving exposure in the electronics market with Dixons among others.
Our retail relationships include Woolworths, Sainsbury’s, Blockbuster, WH Smith, Littlewoods, Gus, Index and Tesco. In HMV we were responsible for 40 of the top 50 budget titles earlier this year.
But it’s not as simple as just filling the ‘bargain bins’. We had to show the offering was credible. Done well they generate lots of impulse purchases and higher footfall so outlets see the benefit even if they are not making huge sums directly.
Another challenge is meeting demand, Tesco gave us two weeks to deliver 90,000 units for a promotion, it wasn’t a problem. We carry big stock and back-up, whereas competitors would struggle.
A third of our turnover now comes from DVDs and the rest is made up of audio, 30% comes from range management/ merchandising – where for example we are the largest non-food supplier for Macro in the UK.
We think we’ve achieved a third of the potential in DVDs. And we are now in a position to ferment relationships with the major studios, wholesaling and promoting their back catalogue – DVDs on a royalty arrangement – rather than having to own the rights. While less profitable on a per unit basis, this shift in strategy will vastly improve the range of titles available and cement our market position further.
With a little luck we should be able to team up with two studios this year and another one or two the next, by which time our turnover should touch £150m-£200m. Well worth the investment.