Non-exclusive impact
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By Tom Paine -- Video Business, 2/2/2007
FEB. 2 | The Weinstein Co.’s exclusive relationship with Blockbuster for the rental channel has brought into focus the meaning of the First Sale Doctrine, the limitations of trade organizations and the power of the Internet to connect retailers all over the country to discuss and get a jump on the issue.
Paine
Weinstein is directing distributors not to sell to rental accounts, only to retail accounts. They have also instituted measures to convince consumers that Blockbuster is the only legitimate outlet for renting Weinstein movies. Of course, rentailers know that by law, we can rent legally obtained DVDs, and many are up in arms that someone is implying otherwise. So what is a rental store owner to do?
The National Entertainment Buying Group has sued Weinstein to stop inferences that non-Blockbuster stores are renting illegally.
The Entertainment Merchants Assn. and Independent Dealers of Entertainment Assn. have provided educational materials to assist members in understanding their rights. Some members want EMA and IDEA to stop the Blockbuster-Weinstein arrangement. These organizations, however, have no regulatory power. Their role is to protect our right to do business, to educate and to promote the industry. This is valuable, but we can’t look to them to resolve our competitive issues.
Distributors, likewise, are not in a position to impact the terms of the deal.
Independent retailers, then, are left with various ways of coping on their own, including buying Weinstein titles off the shelf at approved retailers and choosing to show their disapproval of the deal by not buying any product from Genius Products, which distributes Weinstein titles and is 70% owned by Weinstein. Each strategy has unique ramifications.
Based on a multitude of communications with both retailers and non-retail members of our industry, I believe independents that aren’t already obtaining rental product from other retailers will start to buy Weinstein titles from retail. Once started, they will buy other studios’ product from retail as well, potentially damaging traditional wholesalers.
I think large rental chains (other than Blockbuster) will also find ways to get key Weinstein titles.
I predict consumers mostly won’t care about the titles involved or Blockbuster’s channel exclusivity, and the deal will dissolve because either Blockbuster or Weinstein or both will suffer financially and the deal won’t make any sense.
As a result, independent retailers need not worry about other studios striking exclusive deals with this breadth.
This industry has a record of throwing new ideas against the wall to see what sticks.
Most go plop.
Tom Paine is owner of six-store DVDNow!, Redmond, Wash.
