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THE MORNING BUZZ: Poll Shows Avoidance of New <I>Smoochy</I> Plan

11 Aug, 2002 By: Kurt Indvik

“What's old is new again” might be one way to look at the various swoops and turns some studios are taking as they look for financial models that make sense in this topsy turvy, VHS-to-DVD, rental-to-sellthrough world that is home video.

They can and will try all manner of approaches to what they perceive as a problem – not getting what they feel is the appropriate return from the market – but if the plan doesn't make sense to retailers, its chances of working are slim.

Warner is trying something “new” by returning to the old goal system for VHS titles, testing the concept on Death to Smoochy and Monday Night Mayhem. The new goal program, admittedly a test for Warner (the Oct. 15 release of Warner's Insomnia has VHS priced at sellthrough), is designed primarily to help the studio reach what it deems acceptable revenue numbers from its rental store customers, since it was not getting enough volume action under the flat-rate price program. The goal program, the studio said, helps it realize the numbers it apparently needs on the title for those that buy small amounts and allows those who buy more to realize the lower price if they hit goal.

Well, it doesn't seem to be making much sense from the retailer's viewpoint, if one considers an informal online poll taken by Video Store Magazine this past week on Hive4media.com. Asked, “What do you plan to do about Warner's ‘Death to Smoochy' under the new pricing plan?” the consensus was pretty clear from more than 80 percent of the more than 100 votes cast: avoid the Warner plan or avoid the title altogether.

The poll showed that 49.45 percent of the voters said they'd “buy the title sideways or at a mass merchant; 32.97 percent said they'd “boycott the title” altogether; 14.29 percent said they'd “buy more through my usual channels,” while 3.3 percent said they'd “buy less through my usual channels.”

Okay, this is not meant to be anywhere near a statistically valid piece of data. However, the significant majority holding out against the plan is at least an indication Warner may have some challenges ahead if it intends to roll this program out with other titles.

Then came the news last week that Columbia TriStar Home Entertainment is embracing a return to revenue now including DVD and VHS for specialty retailers. (CTHE is also returning, albeit temporarily, to its old relationship status with distributors, but that's another story…also on this week's print edition cover.

At first blush the new rev-share deal appears to have balanced opportunities for retailers and the studio; the program is designed to give retailers a chance to more affordably serve their VHS customers, while limiting DVD buy to no more than 45 percent under the program, another nod to trying to keep VHS from being prematurely excised from the market due to DVD pricing. But the program also seems to help protect the studio's sellthrough DVD business in that under the program, rentailers must wait 45 days before they can sell their DVDs as previously viewed, which is much longer than rentailers have been waiting to turn at least some of their DVD rental inventory into sellthrough.

The home video business continues to transform as DVD marches onward in its conquest of the home entertainment market. Studios and retailers will be trying all sorts of new things to find the best financial model for them. But in this fluid environment any concept had best adhere to the “win-win” philosophy to have any chance of succeeding.

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