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TK's MORNING BUZZ: Ouch! <I>Buzz</I> Takes a Beating for Praising MGM Home Entertainment's Low Unit Pricing on 'Hannibal' Video

3 May, 2001 By: Thomas K. Arnold


Ouch! I received nearly a dozen verbal beatings yesterday for my column praising MGM Home Entertainment for going to low unit pricing on Hannibal.

One critic accused me of sounding "more like a studio executive than a retailer" (thank you very much, but I am neither); others noted that because MGM had had such a liberal copy-depth program, selling Hannibal for $45 actually amounted to a price increase.

In the interest of fairness, here are some edited excerpts of the critical responses I received -- in the hopes that my readers will send in more comments so we can keep this discussion going.

"While I applaud MGM to a small degree for this offering, the truth is that 'flat pricing' does not necessarily mean 'fair' pricing. Your editorial states that Hannibal 'will be available at $45 to all retailers.' In reality, the chains will still pay considerably less, so the statement is not really accurate. While I am sure that MGM would allow Blockbuster to pay $45 per copy, I doubt that Antioco & Co. would opt to do that."

"Forty-five dollars is a little high for a test versus many program prices. Hannibal was a dog for most who saw it. Then comes problem No. 2: Do I buy heavy on this title to show support for this price point? Or do I buy carefully because the purchase numbers on this title will become a base line goal for the return of programs later. The studios are a tricky lot and not to be trusted."

"MGM's $45 flat pricing on Hannibal is really a 29% INCREASE over what they would have charged under their copy-depth program. Under MGM's Simply Solutions Program tapes cost you $35 when you meet your goal. If a store's goal was 20 his cost would have been $700. Now for just $720.00 he can buy 16 copies... Still, most retailers will welcome this move. We hate goals like kids hate liver and lima beans."

"This represents a smooth move by MGM. Retailers who order as deep as their goal would have dictated will pay 29% more per copy. However, most stores would have bought that title sideways paying around $45 per copy, with $10 of that $45 going into the pockets of subdistributors and overnight shippers. Do I like the idea of paying $45 flat per VHS cassette? NO. It is too high when Blockbuster is paying $25. Having said that, this still beats the hell out of copy-depth programs because I would be free to actually stock what rents in my store. I guess after all these years of dining on liver and lima beans some overpriced steak looks pretty good."

"Offering Hannibal at $45 essentially solves nothing. Most independent retailers have (or should have) moved their focus toward DVD. This is still 50% less than the tape, with tons of other features. Why waste your money on one copy of the VHS when you can buy two DVDs? This assumes MGM doesn't have something up their sleeve with DVD pricing... Hannibal is likely the last hurrah for MGM this year, and they're just trying to milk it for all it's worth. Besides, they'll probably paring down to a few distributors around August anyhow. I figure, they're just trying to cover their butts before they drop that bombshell."


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

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