UPDATED MAY 23 | Columbia TriStar Home Entertainment by September intends to place every independent rental retailer on a direct account with the studio.
Most major studios already sell more than three-quarters of their product directly to large chains. Columbia's new direct program, dubbed Retail Connect, will in essence cover roughly the last 20% of the studio's business, comprising mainly independent rental stores.
Columbia confirmed this week that Ingram Entertainment and VPD will serve as the studio's agents for sales, fulfillment, credit processing, invoicing, collections and returns for the direct program (VB, 5-19).
Columbia will set retailer credit limits and product prices. Retailers will receive a separate invoice for Columbia product and make payments to the studio.
The program will begin for catalog titles on Sept. 22 and for new releases Oct. 14. It applies to both rental and sell-through priced VHS and DVD.
Retailers last week began receiving packets from the studio containing a timeline for the change and a credit application.
The studio is promoting Retail Connect as providing "one price for all" retailers in the program. That means, however, that some retailers may pay more than they currently do for product while others might pay less.
While some distributors and rival studios have speculated that the goal of the Columbia program is to eventually enlist all rental accounts in revenue sharing, CTHE executive VP of North America Marshall Forster said last week that "the options that are available today are still going to be available." That includes a full-price option and two revenue-sharing programs offering VHS only or a mix of DVD and VHS.
Retail Connect " should be taken as a very clear signal of our commitment to this segment of the business," Forster said, referring to independent rental stores.
Under Retail Connect, Columbia will assume "the risks closely associated with the traditional distribution system. These include potential problems created by inventory management and collections," Forster said.
"Any time that we have gone direct with a retailer, our business has increased," he said in explaining the benefit to the studio of selling directly even to the smallest accounts. By receiving direct sales information from retailers, he said, the studio is better able to create effective sales and marketing programs and can bring better insight about potential retail performance to bear when considering program acquisitions.
To sign up for Retail Connect, retailers must submit a "customer authorization form" to Ingram or VPD by July 24.
In addition to VPD and Ingram, Baker & Taylor and Alliance Entertainment also will be allowed to sell Columbia product to a small number of select accounts.
"Our Retail Connect strategy is the next step in the evolution of our home entertainment business, which has grown significantly with the advent of DVD and sell-through expansion," CTHE president Benjamin Feingold said in a statement. "It will allow us to manage with our customers the various retail business models in a fair and responsible way consistent with our revenue growth objectives."
The studio wants "more control of its product," said Ted Engen, president of the Video Buyers Group. Although retailers might have a paperwork headache in the coming months, Engen said he believes Retail Connect could benefit retailers in the end because the studio will learn more about retail issues. "They're gonna learn a lot," he said.
Others were not so optimistic.
Dave Stevenson, owner of the DVD-only Big Picture Video in upstate New York, said he plans to continue ordering product through Flash Distributors. "It's one more way to make it more difficult for independent retailers," he said of Columbia's direct plans.
Flash president Steve Scavelli said he plans to continue carrying Columbia product for customers despite the studio's planned changes.
Scavelli said he suspects some retailers will skip going direct and instead buy only the bigger Columbia titles available at sell-through, passing on lesser titles, as Flash is asking its customers to do.
