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UPDATE: Rentrak Expands Game Rev-Sharing Program

8 Oct, 2002 By: Kurt Indvik

Rentrak at the East Coast Video Show announced it has inked a one-year deal with Vivendi Universal Games to offer video game rental revenue-sharing to its 6,000 independent retail accounts.

The deal features 10 games under all three major platforms, including Spirro, Bruce Lee and Tribes set for November release; Lord of the Rings, Scorpion King, Crash Bandicott, Seablade and RLH-Run Like Hell due out this month. A handful of games already shipped, such as September's The Thing, also will be included in the deal, but those will be resolicited to retailers under the new terms, Roberts said.

"They pick and choose which titles they'll provide us over the course of the year," said Chris Roberts, VP of sales for Rentrak.

Terms are the same as those for Rentrak's first game under a revenue-sharing agreement announced last week.That title is top-seller Blood Rayne from Majesco Sales available Oct. 31.

Roberts has declined to specify how many agreements the company will be announcing, but added he expected “conservatively” 10 publishers coming on board in the next month.

“We have a lot of momentum right now and are in the midst of negotiating with a number of publishers as we speak,” Roberts said.

Roberts said Rentrak's typical video game revenue-sharing arrangement will involve an upfront cost of $10 to $11.50 per game, with a 50–50 split of the rental revenue over a one-year lease period. There will be a 120-day sellthrough option on used games, with a minimum sellthrough price of $10 and an even split, Roberts said. At the end of the lease, a nominal end-of-lease fee may be assessed depending on how the title performed at rental, he said.

The rental business is becoming a much more attractive option for game publishers, said Roberts, noting that there are some 200 titles coming out in October. While the major franchises such as “Grand Theft Auto” will have no problem gaining retail space and consumer support at major sellthrough outlets, many titles will have difficulty getting any shelf space or consumer attention, and thus the rental option becomes that much more important to expose consumers to these games. Recent surveys demonstrating the ability of rental to drive sales on second-tier games especially are not lost on these suppliers, Roberts added. “They are definitely getting the concept of rental as a tremendous value to their business,” he said.

Eric Smith, owner of 13-store St. Cloud, Fla.-based Video King, has been involved in video games since 1989 and generates about 10 percent of his revenue from the sector. He acknowledged the importance of revenue-sharing as the key to taking the video game business to the next level for independents.

“It's all about being able to provide the depth of games to satisfy our customers,” Smith said. “And it's important for us as it improves our competitive stance against the chains. It also reduces our risk. We will definitely support this title [Blood Rayne] 100 percent.”

Indeed, in a recent earnings call, Rentrak chairman and CEO Paul Rosenbaum said video games as a business segment of the home video specialty retailer are becoming critical.

“Some retailers are going to be forced to put in video games and move some of the rest aside just to be competitive with the Movie Gallery, Hollywood or Blockbuster down the street,” he said.

Video game rentals have generated $524 million year-to-date, according to the Video Software Dealers Association, an increase of 13 percent from last year at this time.

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