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UPDATE: Lions Gate Adopts Flat Pricing for '0'

9 Nov, 2001 By: Joan Villa

Lions Gate Home Entertainment will shelve complicated pricing programs and release its tentpole first-quarter title O Feb. 19 on the Trimark Home Video label at a flat under-$40 VHS price, making it the third supplier to eliminate copy-depth formulas on a title.

Following the lead of MGM Home Entertainment and Artisan Home Entertainment, which have both adopted low, single-unit rental pricing for most theatrical fare, Lions Gate followed suit with “one flat price that should allow all retailers to buy each unit at under $40 apiece,” according to Peter Block, president of home entertainment, acquisitions and new media. A two-disc deluxe edition DVD will also street Feb. 19 at $24.99 suggested retail price.

“What we’ve been hearing from retailers is ‘we want a flat price,’” Block explains. “We’re hoping it’s a mutual scratching of backs, where we’ll come in at a low price and we can expect you to buy accordingly.”

Block says he hopes the title’s success will set a new course for future productions and acquisitions that will create more “locomotive pictures” capable of driving the studio’s business. The goal is at least one “tentpole” release such as O each quarter, he adds.

Internally, the company believes O will exceed Trimark’s past independent film hits, including Eve’s Bayou, and is backing it with a sales effort and a marketing campaign designed to support long-term sales, he says. Advertising plans include print ads targeted to colleges and youth publications such as Rolling Stone and Entertainment Weekly, broadcast promotions on MTV, BET and E!, radio spots in the top 20 markets and no pay-per-view for 60 days.

A sales success for O would pave the way for more low rental pricing on high-awareness theatrical films.“If it works, I would think similar box-office titles would be handled in a similar fashion,” Block notes.

O, which grossed $16 million at the box office, stars Mekhi Phifer, Josh Hartnett, Julia Stiles and Martin Sheen in a modern-day tale of jealousy and betrayal based on Shakespeare’s Othello.

The DVD will contain both the widescreen and full-frame versions plus an audio commentary from director Tim Blake Nelson, Stiles and cinematographer Russell Lee Fine. The bonus DVD features cast and crew interviews, deleted scenes and the classic version of Othello with a newly remastered score.

Retail reaction to the flat-pricing deal is positive.Todd Zaganiacz, president of the New England Buying Group, calls the move “fantastic.” “I applaud Lions Gate and I wish more studios would follow suit,” he says. “I think MGM has started something. The age of video has changed. With the invention of DVD, buying the way you did three years ago doesn’t exist anymore.

“I think they’ll do very well with it and they definitely have our support.”

Ted Engen, of the Video Buyers Group, also gives the move a “thumbs up.” “I am in favor of flat pricing on any and all titles,” he says.

Engen thinks studios’ interest in flat pricing is piqued and says he has had studio reps calling him and asking him about what kind of support flat pricing would get from retailers. “They ask about projections concerning flat pricing compared to goal setting,” he says. “The biggest concern that a studio has is if they get away from the programs are they going to have a downturn in total overall sales.”

On his last trip to California to meet with studio reps, he says, “The two questions I was asked most were ‘how do you feel about flat pricing?’ and ‘how do we get retailers to go beyond the top 10?’”

Engen goes so far as to predict more studios will shift toward flat pricing, either on a widespread or title-buy-title basis. “There’s enough information out here that indicates that change is needed and I truly feel that within the next six to nine months we’re gonna see some change,” he says. “Is it going to be radical change? No, but there will be gradual changes in the near future.”

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