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Rentailer Group Report Card Gives Faint Praise

29 Dec, 2005 By: Jessica Wolf

The National Entertainment Buying Group (NEBG) has released its studio report card for 2005, and not one major supplier earned an ‘A' in the DVD category from the 200-retailer group.

It was ‘B' scores on DVD all the way around, attributed to the disparity retailers saw in DVD product pricing from their distributors and the first-week sales pricing at mass merchants.

The power of the mass merchant in the DVD market, subsequent price erosion and dump-bin tactics are the biggest issues facing the independent retail community, said Todd Zaganiacz, president of the NEBG.

Not only do low-price strategies edge indie retailers out of the market, they devalue the overall entertainment industry, the NEBG report said. And retailers are alarmed at how pervasive it continues to be.

“Along with severely discounted new-release titles, this year we've seen a dramatic price-slashing of good catalog product at the mass merchants, all offering the same product for under $4 on Black Friday,” the report card reads. “It won't be long before the general public perceives all DVDs to be this cheap and in return erodes the price they are willing to spend on any movie.”

In the last year that NEBG evaluated VHS product, only 20th Century Fox Home Entertainment scored an ‘A' in the category. The group scored suppliers HBO Video, Lionsgate, MGM Home Entertainment, New Line Home Entertainment, Sony Pictures Home Entertainment and Warner Home Video with failing grades for VHS for clinging to outdated rental pricing and unrealistic programs.

Overall, the NEBG was happy with the rev-share agreements for the bulk of the studios. Only Sony, Buena Vista Home Entertainment and Universal Studios Home Entertainment scored an ‘F' — Buena Vista and Universal do not offer rev-share at all. The report exempts DreamWorks titles from this, as that supplier just began offering rev-share terms over the past year.

The NEBG singled out MGM and Warner for excellent rev-share offerings.

The group praised several studios — Fox, MGM and Warner — for rental-friendly and timely continuing-season TV product.

The NEBG also included its annual list of titles retailers would like to see released on DVD, like High Road to China from Warner; Harry and the Hendersons and “The Bionic Woman” TV series from Universal; North and “I Dream of Jeannie” from Sony, which just announced a street date for “Jeannie”; and many others.

The report card also addresses issues like mass merchant exclusives and the cessation of screener copies, and asks studios to rethink their policies on these tactics.

The report acknowledges that pricing and rev-share strategies are likely to change substantially in the coming year for studios like MGM and DreamWorks, as this product shifts fully under Sony and Paramount, respectively.

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