No Fs in Video Buying Group Ratings19 Dec, 2002 By: Joan Villa
The New England Buying Group issued its second annual report card rating studio programs and pricing, even adding in four distributors as well -- but this year no one got a failing grade.
In fact, a couple of studios improved markedly from 2001, especially Buena Vista Home Entertainment, which scored B+ across the board, up from last year's C in DVD and F in VHS, thanks to better revenue-share splits, lower upfront pricing and more generous sell-off terms.
MGM Home Entertainment took top honors for the second year, inching grades up to an A+ for both VHS and DVD.
Among distributors, Rentrak Corp. scored the highest, with an A grade for courteous and knowledgeable staff, on-time shipments, improved revenue-sharing deals, the addition this year of video-game revenue-sharing, and for being “at the top of their game” in promoting studio product.
“They've been a tremendous asset to the retailer,” noted buying group president Todd Zaganiacz, who owns Video Zone in South Deerfield, Mass. “Especially with VHS numbers dropping, they've alleviated a lot of your risk by having that rev-share option on VHS.”
The report card is the New England Buying Group's way of assessing studio policies on pricing, programs and other factors, from packaging to such features as the availability of widescreen and full-screen versions. For distributors, the 42-member group evaluated fill rates for new-release and special-order product, sales team responsiveness and overall service.
Baker & Taylor received a B+, while VPD and Ingram Entertainment both scored C. Although VPD and Ingram “do a great job in delivering new-release preorders,” the report criticized both for low catalog stock levels, the inability to ship new releases and catalog titles together as a single order, and the unavailability of new releases a few days after street date. Flash and WaxWorks were not rated because too few members utilize those distributors, Zaganiacz explained.
“We wanted to grade Baker & Taylor ‘A' because of their service,” he added. “They have a lot going for them but unfortunately because some studios have pulled their product, when it comes to the fulfillment level, what do you do when you want to buy Columbia product or Universal product? Those that pulled made a grave mistake because nobody can handle catalog like Baker & Taylor.”
“We always try to project for additional sales in product,” he added. “The issue is we cannot always determine 100 percent what those additional sales will be.”
While disappointed that Ingram didn't fare better in the group's eyes, president David Ingram noted that some of the inconveniences the retail group suffered, such as shipments coming from two locations, are necessary for distributors to make a profit.
“We have 10 shipping facilities to be close to our national customer base and keep shipping costs down, whereas, we concentrate most of our deep catalog inventory in Memphis to keep inventory carrying costs down and fill rates up,” Ingram noted. “If we consolidated catalog with new release from this location, service levels would go down and shipping costs would go up.”
VPD SVP of marketing Marty Jorgensen said, “Although we do business with some of their members, the New England Buying Group is not a VPD customer. It appears from this report that they have just assumed that our service levels are the same as Ingram's, which are simply inaccurate.”
On the studio side, last year's worst scorers, Columbia TriStar Home Entertainment and 20th Century Fox Home Entertainment, raised their F grades to Ds because of slight improvements to VHS copy-depth programs that simply didn't go far enough, Zaganiacz explained. Both received a B+ in the DVD category.
“While they've made adjustments and improved a bit, their programs are still somewhat out of line compared to other studios,” he added. Columbia, in particular, received low marks for lacking a Rentrak revenue-sharing option, which he insists is “leaving a lot of dollars on the table.”
Top studio scorer MGM was “proud” of the recognition, noted Blake Thomas, EVP of marketing.
“At MGM, much emphasis is given to nurturing our retail partnerships and to developing innovative marketing and sales programs that benefit everyone involved,” he said.