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APAR's WORKING WEEKEND: Retailers Respond to ‘MGM 45’ by Firing ‘BB’ Gun

4 May, 2001 By: Bruce Apar

No sooner had MGM last Tuesday announced its so-called flat wholesale pricing of $45 on box office blockbuster Hannibal than some of the very trade customers it was meant to mollify took dead aim with their “BB” guns. “Never mind what MGM is charging us,” was one refrain. “What will Blockbuster pay?” The presumed answer: less than you.

Such is the deeply cynical, distrustful state of the video rental trade in this time of copy-depth, revenue-sharing, sideways shipping, wholesale slashing and DVD buildout that there is no such thing anymore as a simple announcement. Every whisper is freighted with fear and loathing.

In the Internet-time it takes for any vendor news such as MGM’s to hit the street, the vicious circles of chit-chat already are dizzy with anxious speculation about what dark forces lurk behind the seemingly innocent, positive-sounding press release.

Just because emails and discussion boards bleed with paranoia doesn’t mean the correspondents don’t have a reason to be.

For example, by the time you read this it may be painfully clear why MGM last week was meeting one-on-one with its wholesale accounts. Distributors waiting their turn to be called to account couldn’t help but wonder what MGM’s agenda held in store, and what did it have to do, if anything, with Hannibal (Insert your own cannibalization pun here.)

As for Hannibal itself, there’s no famine of food for thought. On balance, is the $45 wholesale a price increase or decrease? Since titles with lower unit pricing than Hannibal are tied to minimum-copy purchases, should retailers base their answer to the previous question on unit pricing or on their total cost for copies purchased? Is Hannibal a high-priced sellthrough or a low-cost rental? Will MGM’s Hannibal strategy arrest sideways selling by subdistributors? What do the vast majority of retailers who don’t frequent the usual Internet haunts think about MGM’s program? What does Hannibal’s VHS pricing imply about MGM’s unannounced marketing plans for the Hannibal DVD? And, just out of curiousity, what is Blockbuster paying for Hannibal?

Comments? Contact Bruce directly at:bapar@advanstar.com

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