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NAVD Faces Fragmented Distributors, Fewer Studios Distributors, Fewer Studios

28 Mar, 2003 By: Joan Villa

Armed with individual agendas rather than shared issues, a fragmented group of wholesalers will meet with a dwindling number of suppliers in Los Angeles April 6 to 8 at the National Association of Video Distributors' annual conference.

The top issue sure to be on everyone's plate is how to best manage the VHS-to-DVD transition, particularly since studios are seeing shrinking revenue from replacing rental-priced VHS with low-priced DVD, said WaxWorks president Kirk Kirkpatrick.

“We're really at a turning point here as to where our industry is going to go,” he said. “The studios are in a tough position, and our goal is to support them and the long-term future of the video rentailer store, because ultimately those venues that have been so profitable for all of us in the past could be threatened by decisions that could be made in the future.”

Ingram Entertainment also expects two-thirds of the company's time to go toward tackling the DVD transition issue.

“We've got the numbers and they've got probably better forecasts than we have on the transition from VHS to DVD,” said Bob Webb, Ingram's EVP of operations. “We want to ask the studios what are their projections for the transition this year versus next year, what percentage will be VHS by the end of 2003 and the end of 2004.”

As VHS declines, will studios change the DVD model and move toward rental pricing, Webb wonders. “We don't expect anybody to say ‘yes' to changing the business model because we don't think anybody will, but we have to ask the question,” he said.

For the second year, a major distributor, VPD, has not registered, and the remaining five wholesalers are dismayed that another supplier has dropped off the roster: MGM Home Entertainment will join last year's no-show, Columbia TriStar Home Entertainment. At the time, Columbia TriStar was in the process of taking major accounts direct and leaving the remaining rental base to a limited network of wholesalers. Universal also dropped out of the NAVD conference after deciding to distribute only through Ingram Entertainment and VPD, and to use Rentrak for revenue-sharing.

Meanwhile, Buena Vista Home Entertainment, DreamWorks Home Entertainment, Fox Home Entertainment, Image Entertainment, Paramount Home Entertainment and Warner Home Video are still slated for meetings, and distributors said they'll still attempt to visit privately with those suppliers who don't attend.

“Right now there are no common issues or common agendas,” said NAVD executive director Bill Burton. “Because of the diversity of distribution right now — and the studios have created some of it by giving selected distributors a certain class of trade and others do not have that class of trade — it does reduce the opportunity for commonality.”

Despite the divisions, distributors also expect to explore the viability of DVD revenue-sharing, the potential for expanding the business into new retail outlets, and business details such as credit, rebates, program goals, street-date violations and pirated product.

“The meetings this year are going to be much more strategic in nature,” said Baker & Taylor president Jim Ulsamer, who also serves as president of the NAVD. “A number of us met with studios in the fall and asked about their experiences at the trade conference, what they liked and what they wanted done differently, and certain themes emerged: a better sharing of information and sales trends and the like, and an interest in selling more product in other channels. So I think most of the discussions will be more strategic in nature in order to grow the business better.”

And though this year's event will be the smallest gathering ever, those who do remain are staunch supporters of the conference.

“Even the small studios have every reason to be there,” said Flash Distributors president Steven Scavelli. “Distributors are 30 percent of your business. Even if you spend $10,000 to go, it's once a year. Even if Universal and Columbia aren't there, and there are just four or five distributors, it's still worth it as a convenient way for studios and distributors to get together.”

Over the past year, the association made a “concerted effort” to persuade new distributors to join, particularly music one-stops Alliance Entertainment and Entertainment Resources, but “to no avail,” NAVD's Burton said. However, the association may seek to expand membership among secondary suppliers, sources said.

“Right now there might not be a lot of big issues out there but there will be,” Ulsamer said. “And it's useful to have a trade organization to get together, with counsel present, to look at issues and what's good to do for the common good of the industry. For us it still has value.”

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