UPDATE: ‘Legally Blonde’ Draw Is High, Price Is Flat24 Aug, 2001 By: Joan Villa
MGM Home Entertainment will extend flat pricing "for the foreseeable future," filing the $85 million box office comedy Legally Blondeas its third rental title under the simplified pricing strategy.
The Reese Witherspoon-starrer will be released on VHS at a $40 retail price Nov. 6 (prebook Oct. 16). The DVD, priced at $26.95, will streetthe same date (prebook Sept. 25).
MGM expects Legally Blonde to be the last major title of substancereleased to the rental market this year, says executive v.p. of sales Robert Wittenberg. The title follows on the heels of a $40 price for the Oct. 2 release Heartbreakers and the $45 Hannibal, which reached stores last week.
"We exceeded our expectation on Hannibal and all expectations are we’re going to do even better on Heartbreakers," explains Wittenberg. "Icertainly think Legally Blonde is a perfect video film and it’s demonstrated great staying power in the theaters. We think it’s a great early Christmas gift for the rentailers."
Distributor David Ingram of Ingram Entertainment says his company was "very successful" at selling Hannibal and predicts Legally Blonde will also tally strong sales.
"Flat pricing is a no-brainer from distribution’s standpoint," explains Ingram. "We would like to get back to selling the product and not selling programs."
Wittenberg says the $40 price, which allows retailers to buy the quantity they need without purchase goals or restrictions, has alsoeliminated the need for "sideways" selling by distributors or retailersseeking to circumvent complicated studio programs.
"It’s definitely put a big dent in [sideways selling] and it’s not something the sideways sellers are happy about," agrees distributorSteven Scavelli of Flash Electronics. However, Scavelli adds, somesubdistributors are still offering the MGM product at the same price or marking it up $4 to $5. Retailers who buy all their product from oneplace will pay the higher cost, he says.
"We wholeheartedly support it and I think the retail community does as well," said Jim Ulsamer, president of distributor Baker & Taylor. "They may quibble about the price, but I think they’re generally happy. Wecertainly sold more [of Hannibal] than if they were under a program because the darned programs get abused by the part-time distributors."
Nonetheless, Scavelli dubs the MGM strategy "a breath of fresh air" that led to smooth sales for Hannibal and put the focus back on sellingproduct rather than explaining mathematical formulas. Although it’s tooearly to predict numbers on Heartbreakers, which prebooks Sept. 11, Scavelli says he is pleased at MGM’s decision to drop the flat pricing to $40, more in line with the average $35-per-unit price retailers expected under MGM’s previous copy depth program, Simple Solutions.
Ingram agrees a $40 price puts product costs well within most retailers’acquisition averages of $35 to $45 per unit under copy depth programs and will have the added effect of reducing sideways selling. "When there’s a flat price there’s no incentive for sideways selling," he says. "Studioslike MGM, when they go to a flat price, are demonstrating to their distribution partners that they want to see product going throughtraditional distribution and see traditional distribution kept healthy."
Although the flat pricing provides lower margins for distributors, Scavelli endorses the strategy because it frees his time for marketing and other services that in the long run will strengthen the retail base.
"I welcome a world where we’re selling product based on exact stores’ demographics and their needs at that time, rather than what we’ve beendoing the last three years," he adds.