Hollywood's scrap men
These resellers of DVDs, CDs and books make millions from the media industry's leftovers.
(Fortune Small Business) -- How often have you dropped $10 per ticket and $12 for snacks to see an over-hyped dud at the metroplex? "We could have stayed home and watched a bad movie," you say. You should talk to the Kugler brothers.
They flip Hollywood's detritus to discount retailers, hoping you'll make an impulse buy at Wal-Mart (WMT, Fortune 500) - why not try Let Sleeping Corpses Lie or Inside the Male Intellect? - so you can enjoy a perfectly awful piece of cinema in your own living room.
Their company, Distribution Video & Audio, posted $20 million in revenue in 2008, up 60% from 2005. Along with DVDs, they sell CDs (cue up Perry Como Swings!), books (Child Dianetics, anyone?), video games and movie promo items (because everyone needs more mugs and key chains).
The brothers' father, Ben Kugler, launched DVA in 1988, selling videotapes a few at a time to replace rental stores' lost or damaged stock. His son Ryan joined DVA at age 17, buying 25,000 videos from a studio and selling them all to Target (TGT, Fortune 500).
Ryan, now 34, oversees sales and marketing in Los Angeles. Meanwhile, Ryan's 41-year-old brother, Brad, handles finances and operations from Palm Harbor, Fla. Along with discount retailers, DVA's customer base includes cruise ships, libraries and gift shops. The company has also found a new revenue stream: some 3,000 unemployed middlemen who buy movies to resell on the Internet.
But will their business survive when MP3s and online video send CDs and DVDs the way of the 8-track? One of DVA's competitors, Tiffany Wilke, co-owner of Mountain View Movies in Davenport, N.Y., says she's banking on "people who are technology-shy."
Ryan Kugler says there will always be customers who prefer a product they can hold in their hands. And when that product is an Alabama farewell tour CD or the collected episodes of Wild Kingdom, well, who could argue with him?To write a note to the editor about this article, click here.
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