Will Exclusive Deals Grow More Popular?2 Nov, 2003 By: Kurt Indvik
The whole notion of retail exclusives for home video has always managed to irk some, even as we all recognize that in its many iterations, it's an understandable and expected part of the retail business.
There have been short-window exclusives for major retail chains in the past for some nontheatrical titles, and, of course, it's fairly common to see major retailers with unique packaging, title bundles or special add-ons such as related books or gift items packaged with the video by the supplier exclusive to that retailer. But I am beginning to think that we may start to see more aggressive use of the exclusive window deal as competition for shelf space continues to heat up.
Lately, Best Buy has been sticking it to the music retail business, in particular, by arranging for exclusive windows for a number of music DVDs, including an Eagles DVD single and the most recent U2 concert DVD. These were two- to four-week exclusive deals that, while irritating to some competitors, didn't elicit much more than grousing.
But now a group of Canadian music and video retailers is yanking Rolling Stones DVDs and CDs in a reaction to the recently announced four-month exclusive North American window for Best Buy to sell Four Flicks, a four-disc set chronicling The Rolling Stones Licks World Tour. It's the longest exclusive the retailer has put together, and it's beginning to cause something of a furor because of its length, if nothing else — but also because it's becoming an obvious strategy Best Buy has in competing against music specialty stores that are, as we all know, reeling from the downturn in their business.
And, it may also signal the growth of such deals on the part of music publishers who, faced with extraordinary challenges of their own, will crunch the numbers and decide, in some cases, that throwing their lot to one major retail chain exclusively makes more financial sense. (Though, in the case of the Stones, that was a product produced outside of their label, EMI.)
The variables on these exclusive deals are several. What sort of title makes sense for a possible exclusivity deal? What is the retailer willing to order, and how much marketing muscle will the retailer commit to the title. In the case of the Four Flicks release, another variable was, at what price will the retailer sell the product for? According to the guy who put together the deal for the Stones, they went with Best Buy because it could commit to a $29.99 price tag in the United States and a $39.99 price in Canada -- $20 to $30 less than other retailers competing for the deal.
In a noisy retail environment that is fairly drowning in new product, the exclusivity deal may be a model that will appeal to both the supplier looking to do something special for a middling title and the retailer looking to offer something unique to its customer.
It'll be interesting to see how this practice develops in the future.