TK's MORNING BUZZ: MGM's $45 Flat Price for 'Hannibal' Is One of the Most Daring Moves by Any Studio in Years2 May, 2001 By: Thomas K. Arnold
My hat's off to MGM Home Entertainment.
In one of the most daring moves by any studio in recent years, MGM last night announced it will release the mega-hit Hannibal to the rental market at a flat price of $45.
It's the first time a title of this stature has been available at low unit pricing. That's why I believe this time the ploy will work, where previous gambles by Artisan, USA and others did not.
I had to read the press release twice to make sure I wasn't misreading it, because this is exactly what everyone's been clamoring for -- and what NAVD v.p. Noel Clayton, at the association's recent trade conference in Indian Wells, Calif., was intimating would happen.
No goals, no minimums, no formulas, no baselines or matrixes or thingamajiggies. Hannibal, which grossed a whopping $165 million in theaters, will be available at $45 to all retailers. Now there's something to chew on (sorry!).
MGM will hit a home run several times over with this decision. At under $50, Hannibal is right in line with the effective price of most other rental titles under copy-depth programs and revenue-sharing. But because retailers don't have to jump through hoops to get the title for that price, the studio stands to reap a greater share of the proceeds because there will be less cannibalization (sorry, again -- I just can't help myself!) of the title by the sideways-shipping subdistributors. How much more MGM gains from this strategy remains to be seen.
I don't think MGM will have any problem meeting its sales goal on this title. Retailers are getting an exceptionally strong movie at a decent price, and distributors, freed from the burden of administering copy-depth programs, are going to sell the hell out of this title.
There's another potential upside. Smart retailers can score points with their customers by either offering the title for sale, at a token markup, right out of the box -- making sure their clerks understand, and are able to explain, the higher-than usual price -- or by buying a few extra copies and putting them in the sales bin a week or two before their normal selloff date.
Talk about a win-win situation. If MGM succeeds, the old $70 rental cassette could be dead meat, just like one of you-know-who's victims.
Comments? Contact TK directly at:TKArnold@aol.com