HIVE EXCLUSIVE: National Association of Video Distributors Reevaluates Its Membership

24 Apr, 2001 By: Thomas K. Arnold

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INDIAN WELLS, Calif. — Fearing that more members may go under — and its two biggest members may not renew — the National Association of Video Distributors (NAVD) is talking about inviting one-stops and other home entertainment middlemen to join the trade association.Meeting here for the association’s 18th annual trade conference, several board members mentioned one-stops like Alliance, which service independent and online music retailers with DVD.

"We’re recognizing the fact that there would be other people that have the same concerns, or with whom we could exchange ideas," said Jim Pollan of ETD, the NAVD’s president.

Bill Burton, the NAVD’s executive director, said opening NAVD membership is a touchy subject, "because some members of our board feel there are already too many distributors."

But he said he personally favors the idea of expanding membership because he believes it would help give the association more clout - and ensure its survival.

"I’m open to anything that makes the organization more viable and more important to our members — and to our suppliers," Burton said. He notes that many one-stops could join without any change in the NAVD’s membership requirements, the two key points of which are that the candidate takes title to the product and buys directly from at least 50% of the six major studios.

Burton cautioned, however, that nothing has been decided. "No vote has been taken," he said. Followup talks are expected at the NAVD board’s next meeting in July or August.

The concept of broadening membership comes as the NAVD is battling for survival. In the last two years, the association has lost four of its 10 members — Sight & Sound Distributors, MS Distributing, Major Video Concepts and Canada’s Astral Entertainment — and the universal support of two studios.

Warner Home Video last year yanked its rental line away from all wholesalers, tapping Ingram Entertainment for fulfiillment, while Universal Studios Home Video a short time later pared down its network of full-line distributors to two, Ingram and VPD.

Just last week, Valley Media announced it is exiting the rental business to focus on sellthrough.

And throughout the trade conference, there were rumblings that Ingram and VPD may not renew their memberships when they come up for renewal next month.

Both Ingram’s Vern Fross and VPD’s Tim Shannahan were present at the April 22 board meeting, sources say, but their participation was minimal.

"It was pretty bad," said one NAVD board member who asked his name not be used. "Everyone was sitting around the room like deer in headlights. Two people, in particular, said nothing during the whole meeting, and had a puss on the whole time. Any idea which ones?"

Fross denies that Ingram has any plans to jump ship, at least for the time being. "We didn’t say anything about getting out of it [the NAVD] at all," Fross said. Come May, he added, "we will renew, just like everyone else. We’re there. We have no intention of not being there."However, Fross tossed out a caveat: "That’s today. Who knows what tomorrow brings?"Shannahan could not be reached for comment.

The fact that speculation even exists that Ingram and VPD may bolt from the NAVD underscores the tension between the haves and the have-nots, led by feisty litigants Flash Distributors and ETD. The two are suing Universal and its anointed distributors for alleged unfair competition.

The lawsuit reportedly was a key factor in the cancelation of the customary one-on-one meetings between distributors and the press.

"The distributors didn’t want to do it," Burton said.

Next year’s NAVD conference is moving to Los Angeles, April 22-24, in the hopes that a shorter commute will encourage more supplier participation. The absentee list from this year’s parley includes Lions Gate Entertainment and Lyrick Studios.

"I think a change in venue is in order," Burton said. "It will take some of the cost out for the studios. There are fewer of us, and maybe it’s just a good idea to be closer to them."

HIVE EXTRA: ARE COPY-DEPTH PROGRAMS FOR RENTAL CASSETTES ON THE WAY OUT? WILL MGM BE THE NEXT STUDIO TO 'STREAMLINE' ITS DISTRIBUTION NETWORK??

INDIAN WELLS, Calif.—Distributors walked away from their studio meetings herewith mixed emotions.

There was optimism that several suppliers are close to dropping complicatedcopy-depth programs for rental-priced cassettes in favor of low unit pricing.But there were also concerns that another major studio may soon pare down itsdistribution network.

At a Tuesday morning press breakfast here at the National Association ofVideo Distributors’ 18th annual trade conference, association v.p. NoelClayton of WaxWorks said that with so many large accounts "already buying atthe low price," suppliers have indicated a greater willingness to adopt flatpricing than ever before."I would say there should be an announcement soon," Clayton said.

Optimism over this development, however, was tempered by speculation that MGM Home Entertainment within the next two weeks will announce the streamliningof its distribution network.

MGM executives would not comment, but distribution sources say they expect MGM to follow the Universal Studios Home Video model, with full-line distribution limited to two wholesalers, Ingram Entertainment and VPD.One distributor noted that this is an opportune time for MGM to act, since receivables are down and the studio’s next big hit, Hannibal, is not yet insolicitation.

NAVD executive director Bill Burton likewise would not comment on the MGM rumors, but he pointed out that while distribution has taken a number of hits in recent years, "we’re still delivering the same amount of dollars to suppliers as we were when there were 15 of us, in the $2.5 billion range. Our percentage of the business may be down, but the dollars are the same."

In other NAVD news:

o The association is addressing the late shipments problem — NAVD president JimPollan said a current industry joke is that DVD is "day-and-month" — by working on ways to track shipments for members. An e-mail notification system isbeing developed with Deluxe, which handles Columbia TriStar Home Entertainment and Paramount Home Entertainment product; for other studios, Pollan envisions "B-to-B Web sites from where we can just pull [the information] down."

o Ann Daly of DreamWorks has been awarded the NAVD’s 2001 Larry Hilford Award, primarily for her pioneering work in direct-to-video sequels and for her "continued support of traditional distribution," Pollan said. When Universal last fall announced its plans to pare down its distributionnetwork, DreamWorks, which Universal distributes, did not go along.

--THOMAS K. ARNOLD

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