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Genius Moving Beyond DVD

20 Feb, 2008 By: Erik Gruenwedel

While heralding Blu-ray's win over HD DVD as a big step for retail, Genius Products Inc. said it is looking to grow digital distribution and expand into licensing, video games and music, among other areas.

Speaking Feb. 19 at an investor summit in Dana Point, Calif., CEO Trevor Drinkwater said digital distribution has caused confusion regarding how big it would be and what kind of impact it would have on retail.

“That has had an influence on our business and impacted consumer latency in 2007 as they wondered what was going on,” Drinkwater said. “We believe that the path is now clear.”

The executive said managing a digital distribution deal with Apple, Microsoft, CinemaNow or Movielink is no different than DVD with Wal-Mart or Best Buy. Both, he said, require managing long-term relationships.

“You don't just do a deal with iTunes and walk away,” Drinkwater said.

Specifically, the CEO said Genius is working with brands such as World Wrestling Entertainment and Sesame Street to expand their content beyond packaged media and into electronic sellthrough, licensing, games and music.

He said the Santa Monica, Calif.-based distributor has digital rights to most of its licensed content, including feature films from The Weinstein Co.

“The primary difference will be that we won't have to invest as much in our physical distribution system,” Drinkwater said. “We believe we can expand into games, licensing and digital music based on the current relationships we have with our retailers.”

At the same time, Genius is redoubling efforts to maximize DVD distribution agreements with Wal-Mart, Target, Blockbuster and Best Buy — its biggest retail accounts.

Genius had almost $200 million in receivables from Wal-Mart and Best Buy at the end of the third quarter.

He said Wal-Mart continues to aggressively price DVD into 2008. At the same time, Genius ships boxes daily to Wal-Mart that are not full, a situation Drinkwater would like to remedy by acting as a conduit for content partners looking to get into the retail behemoth.

“The more we can put in that box, the more efficient we become,” Drinkwater said. “We really like partners who [can] have multiple touch points with consumers through retail. We think we can provide a very interesting role for them.”

“[Wal-Mart] performs well in recession and our business performs well in recession,” he said. “Renting or buying a DVD is still a pretty cheap way to get entertainment. It is also important that our content partners have as wide a distribution footprint as possible.”

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