U.K. Video Veteran Takes the Helm of Rental Store Association14 Mar, 2002 By: Thomas K. Arnold
He just couldn't stay away.
Four months after he sold 100-store Vid Biz, Britain's No. 4 rental chain, to competitor Apollo Home Entertainment, outspoken retailer Michael Senker reveals he hasn't left the business after all.
He kept one store in the London suburbs, which he continues to operate under his old Vid Biz name.
And he's also taken on a side job as chairman of the Entertainment Software Retailers Association (ESRA), an association of about 700 video rental stores throughout the United Kingdom Senker refers to as "a poor man's VSDA."
"I had lost the enthusiasm that is needed to run a large chain of video stores, so I cashed my chips in," Senker said. "But I didn't want to cut all ties, so I kept the one store, which is five minutes from my house."
Taking the Helm
Senker was named chairman of the ESRA earlier this month, shortly after taking the helm of a subcommittee representing independent dealers.
"I had been a member of the ESRA since our trade association began and when the chairman resigned, I was asked if I would stand in for the position and I agreed," Senker said.
Former ESRA chairman Ray Hipkin stepped down to focus on other business commitments, according to England's video trade magazine View, and the ESRA council has named him honorary vice president of the association.
As for the subcommittee assignment, Senker added, "I guess I got that gig because the studios can't B.S. me about what can be done and what can't. It also gives me a chance to pass on some of the things I've learned over the years running a chain."
Building a Vid Biz
Senker, 52, has been in the video business since 1979, working from a suitcase doing home deliveries for a while before opening a store two years later. He gradually built Vid Biz into a rental powerhouse, thanks in large part to an ambitious franchising program and an accountant as a partner.
Senker has long been an activist, showing up at U.S. trade shows like the annual VSDA convention as well as the East Coast Video Show to lobby for retailer concerns he said transcend continents.
At one point several years ago, he got into a heated discussion with the president of one of the six major studios' home video divisions over revenue-sharing. Senker echoed cries by his U.S. counterparts that the deals offered to independents weren't fair; the conversation ended, Senker recalled, when the studio executive told him, "I don't give a rat's ass if you live or die."
Care and Feeding of British DVD
Senker is as enthusiastic about DVD as his U.S. compadres, noting that while the format got off to a slower start in Britain than in the United States, it already accounts for up to 50 percent of total revenues in some stores.
Still, he foresees problems ahead. DVD pricing in Britain follows the old VHS model — titles are initially released at a higher rental price, then repriced for sellthrough anywhere from one month to six months later. As a result, Senker fears the problems facing independent rental dealers on the VHS side — inequitable pricing and copy-depth deals — will be transferred to the new format.
"From day one the studios hated rental and they continue to do so," Senker said. "Sure, they have paid us lip service, but as soon as something better comes along, they will get rid of us."
Senker is particularly concerned about rumblings he's heard that Warner Home Video is planning to implement day-and-date dual pricing for DVD. Rental dealers already pay more for discs than the big retail sellers, but at least they get them ahead of time. Under this new scenario, the rental "window" would be shut.
"This means a movie will come out with two prices, a lower one for retailers and a higher one for the rentailer — and we will not be able to rent the sellthrough copy or sell the rental copy," Senker said. "Warner apparently believes the rentailer earns too much money, being able to buy product at retail prices."
Warner last year tried to implement a similar strategy in Australia but a federal judge there shot the plan down.
Mark Horak, Warner's EVP of worldwide marketing, was traveling and could not be reached for comment by press time.
Yo Ho Ho: Competing with Pirates
DVD is facing other problems in Britain, too. Region 1 discs (for use in the United States only) are seeping into the country, "which nobody in the United States seems bothered about because to them [the studios], a sale is a sale," Senker said.
"Piracy is also a major problem," he added. "I have just spent three weeks in Asia, where you can buy Lord of the Rings for $1 and of course every other cinematic release as well."
Senker said studios take rentailers, especially indies, for granted and don't realize how important they are to their revenue stream.
"The large retailers [who only sell video] are only interested in buying the big box office movies, whereas the independent rentailers take a spread of ‘A', ‘B' and ‘C' titles," he said. "And our customers, strange as it may seem, still like to come to their local video store, pick up boxes and read them and talk to our clerks about movies."