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Rentrak Kicks Off WHV Rev-Share Deal

7 Aug, 2003 By: Kurt Indvik

Rentrak Corp. officially kicked off its revenue-sharing program for Warner Home Video product today in announcing it will join forces with Ingram Entertainment and VPD to distribute WHV revenue-shared product. This is a departure from Rentrak's normal service in which it picks, packs and delivers product to its 6,000 revenue-sharing customers from its single distribution center.

The program gives retailers access to a wide spectrum of WHV, New Line, HBO and TNT product through the typical distribution pipeline, while Rentrak will be responsible for monitoring the revenue-sharing program through its web-based Home Video Essentials Software program installed in stores.

President of Rentrak Kim Cox confirmed that the program involves a zero upfront commitment from rentailers, percentage splits on all rental transactions, a 29-day selloff restriction and a fee on each sold video.

Retailers contacted by Video Store Magazine confirmed that the terms they have been hearing included zero up front; separate minimum goals for both VHS and DVD involving a commitment to a majority of WHV titles, including those from New Line, HBO and TNT; percentage splits to rentailers that hover in the 55 percent to 65 percent range on each rental transaction; a buyback/selloff fee of about $2 for VHS and $3.50 for DVD, which involves a 50 percent selloff of copies not rented after 29 days, calculated per week; and a charge of 50 cents per copy for all copies remaining after 6 months.

“Basically, if you can sell a VHS for $2 and a DVD for $3.50, and rent it once, you are guaranteed profitability,” said one enthusiastic retailer.

“At first blush it looks very good,” another retailer said of the Rentrak deal. “I'd have to see what they are looking for in terms of the product we're obligated to take, and what, if anything, we can pass on.” Retailers report that the program involves carrying a large percentage of the WHV family of titles over 60 minutes in length, with some exceptions. Minimums on VHS and DVD are reportedly based on a three-month average store volume.

“We have done several of these types of programs over the past 12 to 18 months, and I can tell you this is the one that is getting the fastest acceptance from retailers of any we have done,” said Cox. Industry observers report Rentrak may have already signed up as many as 1,000 of its 6,000 customers to the program. Rentrak has revenue-sharing programs involving 20th Century Fox Home Entertainment and MGM Home Entertainment. Cox said Rentrak has been seeing an uptick in new-account signups in the past several weeks, as news of the WHV deal has been filtering out to the industry.

“By combining our best strengths -- information collection and processing -- with those of Ingram and VPD to assist Warner in serving retailers, it's really created the best of all possible worlds for the retailer,” Cox said.

For WHV, the program is a way to try and maximize the presence of its full line of hit and secondary titles on retail shelves, WHV president Jim Cardwell told VSM in a recent interview (VSM, Aug. 3-9). “It obliges retailers to support our entire line of product. They have to have the hits, but we have numerous titles they don't necessarily have to have. And we'd like to make sure all our products get adequate shelf space.”

“Working with Rentrak, VPD and Ingram Entertainment, we have designed an enticing revenue-sharing offering that we believe will create incremental revenue and profits for both WHV and its retail partners,” said Trevor Drinkwater, SVP of domestic sales for WHV.

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