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Street Date Violation Enforcement Is a Challenge

26 May, 2002 By: Kurt Indvik

The issue of street date violations in the home video business is a longstanding one. Home video retailers had been complaining for some time about street date violations before the issue came to a boil in late 1994, when Jurassic Park was released at a sellthrough price.

Retailers reported a slew of violations -- from mass merchants to such notable chains as Blockbuster Video and Suncoast Motion Picture Co., whose president happened to be chairman of the Video Software Dealers Association (VSDA) board at the time.

The VSDA called special meetings, the National Association of Video Distributors got involved, and a task force was created to study the problem and come up with solutions. Though the recommended solutions were not taken up by the studios (they included “just-in-time” delivery of sellthrough product and a Thursday street date), studios reportedly imposed explicit street date policies on their retail customers.

Today, the major studios have formal street date policies and instructions they send out to their retailers and distributors on a regular basis. It's their game to referee.

Penalties for repeat and flagrant violators vary from studio to studio, but they can include suspension of co-op advertising dollars and delay or suspension of product shipments.

Still, no studio executives contacted for this story could offer examples of an actual penalty being handed out, since violators tend to plead not guilty by reason of “mistake” and promise not to do it again.

Industry observers aren't surprised. They note that the big discount chains fingered the most for street date violations are also the Hollywood studios' biggest video customers.

The Studio Perspective
Privately, some studio executives say given the volume of DVD sellthrough product going into the market to an ever-widening and more active nonspecialty retail base, they are actually quite pleased the street date violations are not worse than they are.

Several executives did agree to talk and expressed pride in their response to street date violation complaints.

“We take all complaints seriously,” said Pat Fitzgerald, SVP of sales at Buena Vista Home Entertainment. “We're just not experiencing many complaints at all.”

He noted most of the violations Buena Vista follows up on are committed by small independents or grocers. “We find out it was either a mistake or [people] who did not know what they were doing … or often it's someone else's titles,” Fitzgerald said.

Though Fitzgerald said he has not heard of many complaints about mass merchants, he agrees the potential is there.

“You have people in the back room handling many, many SKUs, and nothing else is street-date sensitive other than music and video,” he said. “They may or may not know the procedures in the video or music business.”

When a complaint is lodged, Fitzgerald said Buena Vista “gets someone on the ground” to investigate. Though “99.9 percent of the time” it was a mistake on the part of the offending retailer, Fitzgerald noted if the violation is deemed deliberate, the studio would withhold co-op dollars, and if the problem persisted, withhold shipments.

“Most people are trying to do the right thing,” he said.

Joel Goldman, VP of sales for Columbia TriStar Home Entertainment, believes that while street violations occur, “we're controlling the distribution better, and we're shipping it better.

“The bulk of our DVD is direct, and it's easier to control,” he said. “Mass merchants get [the product] about a week out. The merchandisers are clearly marked.”

Goldman said he figures the company may get five or so complaints a month. “We, in turn, call that store to verify [if the store has the product out]. If they say yes, we ask them to pull it, and they would do it.”

But some distribution executives counter that the consolidation in distribution is actually going to exacerbate the problem, since, in general, product will have to be shipped earlier and earlier, and there will be fewer entities tracking larger quantities of DVD sellthrough product.

What Now?
One suggested solution is studios could ask the major retailers to create a street-date-based block in their POS systems for every home video SKU. In this way, when the cashier goes to ring up a blocked SKU, the system will not recognize the purchase, and the clerk will be instructed that the video cannot be sold yet.

Mass merchants do this now for items coming up for sale that may already be on the floor at one price, but will appear in circulars at another price. The product can't be sold for the lower sales price until the appropriate time.

Have you seen street date violations for Harry Potter and the Sorcerer's Stone? What about other recent titles? Snitch here!

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