First Look Announces New Flat Pricing for VHS6 Mar, 2003 By: Kurt Indvik
First Look Home Entertainment joins the ranks of suppliers offering VHS flat pricing, restructuring its VHS pricing for all releases.
Beginning with April releases, all VHS will be offered at the flat price of $57.98, reduced from the company's previous price of $89.95. Whereas previously the company sold VHS in single units and in pre-packs of three under a “buy two, get one free” program, making the cost of goods effectively $59.96 per title, that program has been discontinued, and all VHS will be sold as single units.
“We felt that one flat price for VHS makes a lot more sense right now since the VHS market is becoming secondary to DVD,” said Bill Bromiley, SVP, sales and distribution.
Bromiley said the company could see that retailers were beginning to resist taking advantage of the pre-pack program, which, when they were carrying more VHS, made sense, but now — with the growth of DVD and decline of VHS — doesn't always. Thus, the supplier made the move to eliminate the multi-pack and go with one lower price per unit.
“Our goal was to hit the [wholesale] price of $30 to bring the title into the stores, and we think with this pricing we pretty much do that,” said Bromiley. “The initial feedback has been good.”
First Look has historically been a supplier serving the rental market with about 40 releases per year, with a specialization of quality foreign and art-house films, along with more standard genre films, Bromiley said. Its business continues to migrate toward DVD and away from VHS. DVD sales for the company have already jumped from about 55 percent of sales to 64 percent in the first part of this year.
The flat-pricing move, along with DVD's sellthrough pricing model industrywide, means the company is going to have to sell more units to make up for the lower margins to keep growth apace, Bromiley said. “It's a position most everyone in the industry is facing, and, eventually, I think you're going to see some rental pricing and rental windows on certain product,” he said.
Meanwhile, First Look is moving into sellthrough with the recent acquisition of the “Amazing Heroes” kids series, due at sellthrough pricing on both DVD and VHS in September in time for back-to-school retail.
The pricing change becomes effective with the April releases of Snapshots, a romance drama starring Burt Reynolds, Julie Christie and Carmen Chaplin; Antibody, a sci-fi thriller starring Lance Henriksen and Robin Givens; and Instinct to Kill, an action thriller about a cop gone bad.