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Warner Out for More Booty on <I>Smoochy</I>

1 Aug, 2002 By: Thomas K. Arnold

Warner Home Video's new pricing test on VHS copies of Death to Smoochy (due Sept. 17) and Monday Night Mayhem (Sept. 10) has triggered another controversy among independent retailers.

The Video Software Dealers Association (VSDA) discussion board at press time had nearly two dozen postings about the plan, which retailers describe as letting sellthrough dealers buy videocassettes for $13 each while rental dealers have to pay $39 -- unless they meet a Warner-set purchase goal and qualify for two “free” copies per every one purchased, effectively reducing their cost to $13 per copy.

“I believe this is Warner's way of trying to create two-tier pricing and getting around the First Sale Doctrine,” wrote Nolan Anaya of Captain Video and VP of the New England Buying Group.

“I hope all of us take a good hard look at this program and try to buy in a manner that might discourage this studio from using this program in the future,” wrote another retailer, John LaFreniere of Video Paradise in Leominster, Mass.

Warner executives aren't talking on the record, but insiders said there's nothing two-tiered about the new Flat Price Plus plan. Sellthrough dealers have to meet a goal as well, insiders said, otherwise they, too, have to pay $39. The shift to a goal system from Warner's previous one in which cassettes would be priced at $13 for sellthrough or rental is a test designed to help the studio meet sales numbers among its rental-store customers, which have been suffering since the move to all-sellthrough pricing at the beginning of this year.

“A big chunk of Warner's business still comes from independent retailers and major rental chains,” said one insider. “They buy initially to fulfill output deals, then they buy titles that are covered by copy-depth programs, and then they allocate what's left of their open-to-buy dollars to non-goal-oriented product such as Warner's.

“As a result, Warner isn't getting the volume, because they're the last guy on the list. At first they thought $13 pricing made sense across the board, but they're just not getting the bang for the buck because there are no goals. So they basically put out this program to bring back the goal structure and hopefully get the goal-oriented guys to come back.”That explanation doesn't fly with John Merchant, owner of 49'er Video in Sacramento, Calif.

“That's a totally incorrect assumption,” Merchant said. “Any rental dealer worthy of his or her salt is going to buy titles in sufficient quantity to satisfy demand. To say that Warner is taking a third seat on the bus because they're selling at sellthrough is absolutely crazy. That's not what's happening.”

Merchant said he won't buy either title, because he's gotten used to buying Warner titles for one flat rate and doesn't want to encourage the studio to bring back goals.

“I'm just going to buy sideways or buy at Sam's Club and buy the amount I really need,” Merchant said.

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