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Warner Scraps Rental, May Retool Distribution

10 May, 2002 By: Thomas K. Arnold

There’s been no official announcement, but Warner Home Video is effectively out of the rental business — and Warner Direct staffers may be deployed elsewhere, perhaps in selling DVDs and sellthrough videos directly to retailers.

Sources close to the studio say that based on the success of sellthrough pricing on Swordfish, Training Day, Heist and Thirteen Ghosts, Warner will no longer release rental-priced videocassettes. Training Day, in particular, generated nearly $30 million for the studio, more than it would have realized at a rental price.

The Affair of the Necklace, an art-house film streeting June 25, bears a flat price of $35, but other cassettes will be priced below $20.

The Warner Direct sales team, which numbers more than 60, is already performing telemarketing, sales and promotional functions for the studio’s sellthrough VHS and DVD titles in what sources say could be a prelude to a significant distribution change at Warner.

Warner executives aren’t talking, but sources say the studio wants to streamline distribution.

Under one scenario, Warner would sell product directly to retailers, bypassing distribution and relegating fulfillment duties to Ingram and VPD — just as it did with rental.

Under another scenario, Warner would assign different classes of trade to different wholesalers. The studio has already asked various video distributors as well as sellthrough specialists to identify their strengths. Warner will analyze the results and may partition its business by class of trade. Distributors wouldn’t cross lines; if a wholesaler was charged with selling Warner product to libraries, schools and other institutions, it couldn’t sell to, say, independent video specialty stores.

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