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TK's MORNING BUZZ: Blockbuster Seeks VSDA's Help In Looming Battle Over DVD Pricing

15 Jan, 2001 By: Thomas K. Arnold

The new year has barely begun, but already both sides are kicking and screaming.

I'm referring, of course, to the looming battle over DVD pricing between Blockbuster on one side and Warner Home Video on the other. Blockbuster announced at the VSDA convention that it is lobbying studios for a rental window on DVD, hoping that studios will buy off because a rental window--which means higher initial pricing for new DVD releases, just like the VHS model--helps stave off the cannibalization with VHS rental they all fear.

Warner Home Video's feisty president, Warren Lieberfarb, immediately shot back, "Over my dead body," or words to that effect. Lieberfarb, of course, is the father of DVD, and like a protective daddy he'll immediately strike out at anyone he believes might want to hurt his baby. Blockbuster fits the bill, Lieberfarb believes, because a rental window would hurt the DVD sellthrough market, the format's primary target. Not only that, but a rental window would anger huge DVD sellers like Best Buy and Musicland, useful allies of Lieberfarb who helped ensure a successful launch with their early, and unqualified, support.

I'm on Warren's side on this one. Don't mess with success, and DVD's explosive success as a sales item is nothing short of phenomenal. Why tinker with it? At this point, probably nothing could be done to derail the DVD train, but it's stupid to take even a remote risk. And what are retailers going to tell consumers who have been buying discs for $20 for months, maybe even years? "Oh, sorry, that new movie is now going to cost you $75." I can't see that happening--it would be a disaster.

Blockbuster executives at the VSDA convention were trying to enlist VSDA board members for help, but they're probably not going to get anywhere there, either. The VSDA board made a big to-do last year about the DVD pricing issue, drafting a position paper urging the studios to keep sellthrough pricing. They're not going to reverse their position now, particularly if it's Blockbuster doing the asking. The independent retailers who constitute the bulk of the VSDA's membership are still furious at Blockbuster for its aggressive market-share grab, and they're not about to condone doing something that might help Big Blue.

No, I think Blockbuster's fighting a quixotic battle here, and one that's unlikely to find them any allies.

Then again, I could be wrong. As wacky as this business is, you just never know.

Comments? Contact TK directly at: TKArnold@aol.com

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