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Foreign Affairs

18 Jan, 2002 By: Thomas K. Arnold

While DVD pricing in the United States appears to be stabilizing at sellthrough for new ‘A' titles and a little more for secondary product the big DVD sellers are passing on, in international territories it's a different story.

The absence of a First Sale Doctrine overseas—and, in Europe, the presence of "Rental Right Directive" legislation that allows European distributors to charge different prices to rental and sellthrough retailers for product released at the same time—has spawned a wide array of strategies among the various studios.

Columbia TriStar Home Entertainment and Warner Home Video are big on revenue sharing, with rental pricing for DVDs in territories where there is no First Sale or equivalent to that U.S. statute exemption. It's a simple approach, says Columbia TriStar president Benjamin Feingold: "People are not allowed to rent discs without our approval."

Warner has a similar strategy, although the studio's attempt to export this approach to Australia was recently shot down by a federal court judge there. While there is no statute in Australian copyright law like First Sale, there is also no provision specifically prohibiting retailers from renting videos, such as Europe's Rental Right Directive. Warner had tried getting around this by maintaining a DVD, unlike a videocassette, is a computer program and thus cannot be rented under copyright law, but the court disagreed.

Other studios have a variety of strategies in place in the different international markets. In England, for example, at least three major studios release a bare-bones rental-priced DVD first, followed by a feature-packed sellthrough version between two and six months later. The strategy originated with Fox Home Entertainment with the May 2000 release of Fight Club; since then, other major studios have followed suit, including Buena Vista Home Entertainment and DreamWorks Home Entertainment. Fox and Disney have similar DVD strategies in Germany, Spain, Italy and Australia.

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