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Studios Get ‘A's for DVD, But Some Fail on VHS

16 Dec, 2004 By: Jessica Wolf

The National Entertainment Buying Group (formerly the New England Buying Group) has released its annual studio report card, and suppliers across the board got ‘A's for their respective DVD product releases, pricing and programs of 2004. But nearly all suppliers dropped in score from last year when it comes to VHS product.

Three suppliers received ‘F's for their VHS strategies — Sony Pictures Home Entertainment, MGM Home Entertainment and Lions Gate Home Entertainment.

Suppliers either offer unreasonable VHS programs or are simply pricing the product too high, according to the report.

“Clinging to a rental price formula doesn't work in today's dwindling VHS environment,” the report reads in discussing both Lions Gate and Warner's VHS scores.

“We understand the studios are trying to maximize their revenue when it comes to VHS, but there are pockets of the country that are still very much VHS,” said NEBG president Todd Zaganiacz. And even if only a small percentage of your business is VHS, as a retailer you still try to serve it, he said. Some studios don't make it easy to find that happy VHS medium, he said.

“Some studios are sending out the message ‘don't buy this product,’ Zaganiacz said. “Maybe they're trying to kill off VHS — if so we feel like saying ‘just tell us what your plans are so we can plan accordingly.”

This year, the group added a TV product category to its grading mix for which 20th Century Fox Home Entertainment, Paramount Home Entertainment Warner Home Video (which includes HBO and New Line product) all scored ‘A's for timeliness and consistency of releases as well as for offering specific rental packaging options for the multidisc product.

Three studios received ‘F's this year when it comes to revenue-sharing, compared to one last year: Sony. This year, Buena Vista Home Entertainment and Universal Studios Home Entertainment (which includes DreamWorks product) join Sony in failing grades.

The report card, in its fourth installment this year, does get attention from the studios involved, though it's hard to say just how much of the changes a supplier makes year over year can be attributed to the NEBG grading system, Zaganiacz said.

“We have generated a lot of interest,” he said. “We meet with the studios periodically throughout the year, and every time they meet with us we always get asked ‘what kind of a grade are we getting?’

Meanwhile, on the distributor side, though the group did not formally grade all distributors, once again Rentrak received kudos for “developing better terms and output deals from studios, and adding some top 10 suppliers to game revenue-sharing.”

The reported noted improvements Ingram Entertainment made to its retailer site, but commented on disappointment with service when it comes to Baker & Taylor.

The group also included a “DVD wish list,” an extensive list of titles the retailers in the group would like to see hit DVD from each supplier.

Overall, Warner and MGM were lauded in the report for mining their deep catalogs for DVD releases throughout the year and for their high quality of presentation and packaging the product. Warner was especially applauded for doing away with the cardboard snapper DVD case.

MGM received an ‘A-' for DVD, but would have gotten an ‘A+' if not for the studio's exclusive deal with Best Buy for a selection of titles in their “Midnight Movies” DVD line, the report notes.

The growing power of the mass merchants with their loss-leader pricing and increasing instances of exclusive content are major concerns for NEBG members and traditional rental chains overall, Zaganiacz said.

“The concern is that it's eroding the industry,” he said. “I realize studios don't set pricing, but it's more the concern of what the impact is down the road. It gets worse every year.

“How low is Wal-Mart going to go, and how many exclusives are the mass merchants going to get?”

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