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TK's MORNING BUZZ: Studios Should Keep Indie Retailers Happy -- Their 45% of Rental Product Purchased Is Still a Big Chunk

3 Nov, 2000 By: Thomas K. Arnold

The two major studios that in recent months have broken ranks with traditional video distribution are finding their bold new plans to get product to retailers aren't as simple as they may have appeared on paper.

Warner Home Video is reportedly having trouble making goal on its rental titles--perhaps because it severely understimated the number of independent retailers out there--and, judging from comments posted on the VSDA discussion board, there are serious problems with customer service as well.

Universal Studios Home Video's decision to only use three distributors, meanwhile, is being openly flouted by those distributors who didn't make the cut, but who vow to keep providing their customers with Universal product however they can. Two big buying groups this week weighed in against Universal as well, saying the bulk of their members won't deal with the two annointed full-line distributors, Ingram Entertainment and VPD, and would either buy Universal product on the sly from other distributors or not buy any at all.

Even so, it is doubtful whether either studio will backtrack--or whether Warner and Universal's initial stumbles will deter other studios from similar streamlining.

The percentage of product sold to independent retailers keeps shrinking, and in the studios' minds, there's simply no need for this many distributors. I disagree--I think it's vital to keep the independent retail community healthy and happy, because even if they only buy 45% of rental product, that's still a pretty significant chunk of business. Furthermore, I believe distribution serves a vital function beyond fulfillment and credit--the distributor reps I've known have been key members of their clients' teams, helping and supporting them and dispensing advice and suggestions that, in the end, benefit everyone in the home video foodline.

Nonetheless, distribution streamlining has begun, and in all likelihood will continue--particularly as studios prepare for the inevitable transition from VHS to DVD. Indeed, some pundits predict that it is the studios' ultimate goal to be fast and efficient content exploiters who outsource everything except sales and marketing. Under this scenario, replicators who currently manufacture DVD would be groomed to distribute product as well, leaving the studios virtual licensors, free to move from platform to platform and follow the money from packaged goods to electronic delivery.

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

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