Channel Stuffing Lives On In Hollywood (Oh Yeah, And Deep Throat Surfaces)

Wall Street Journal story.

Now Hollywood's gotten in on the act. DreamWorks, the baby of ex-Disney poobah Jeffrey Katzenberg is in hot water for shipping way too many DVDs of Shrek 2 into its distribution channel. Not that the flick was not a huge hit. It's just that DreamWorks over-shipped disks to the tune of several million to various DVD sellers. And guess what? The DVDs came flooding back. The impact on the company? It failed to meet its forecasts and its stock took a hit.

For the newbies out there, channel stuffing was (is) the practice of shipping product into distribution or resellers and booking the sales as if there actually were a buyer. The problem is, those goods often sit there, like a bad dinner, and end up flooding back to the manufacturer who then has to account for them. First law of physics guys, if you ship something out, it's gotta go SOMEWHERE.

The cut-throat competition for shelf space at retail means that the shelf life of disks can't be what it used to be, says the Journal. That means the disks sell fast the first week available, but sales then fall off drastically as new disks hit the stores.

There were notorious pre-Internet bubble days stories of tech manufacturers shipping bricks (instead of whatever it was they were making) in order to log the sales. In one famous instance, the CEO of one multimedia company that played fast and loose, not only stuffed the channel to the gills but at one point drove a truck full of his product across the parking lot, climbed out of the vehicle and said: "There, it's been shipped, now book it."

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DEEP THROAT REVEALED

Totally off topic, but SUPER interesting nonetheless. Vanity Fair magazine has apparently outed Deep Throat of Watergate fame. The AP reports this morning that the worlds most famous anonymous tipster was none other than one "W. Mark Felt, 91" who was the FBI's number two guy in the early 1970s. Felt has apparently admitted to having been Bob Woodward's source in the story that eventually toppled Richard Nixon.