Marcy Magiera

The new pragmatism?
March 6, 2009

Can anyone else remember the days when the idea that Fox would create separate rental and sell-through SKUs and try to tell retailers which one they had to buy, or that Universal would try to carve out a different window for one class of retailer, would create an absolutely earsplitting hue and cry at retail?

Banners invoking the First Sale Doctrine would be painted and waved through the streets—or at least around the pool at NAVD and through Las Vegas in the middle of summer.

(I imagine a few veteran indie retailers nodding their heads.)

But those days are long over, and the rabble rousers still working in retail are few. The recent studio efforts to limit rental retailers’ access to some product seem legally unenforceable, and most retailers focus on getting around the policies rather than fighting them. It’s not as romantic as the old days, but it’s pragmatic, cautious—this trying to find a way to work within the current environment, even when studio initiatives rub against the grain.

VB’s Susanne Ault quotes indie retail icon Ted Engen as saying that the Fox deal is “not going to be as big of an issue as people think. The main thing is that studios have to add value to get customers to buy, and they aren’t buying. Numbers have been falling through the floor.”

A good three quarters of the studios’ DVD revenues come from a handful of pure retail (i.e. sell-through) accounts. In fact, in this economy, neither the studios nor the large sell-through retailers want to see regular DVD buyers trade down to rental. So studios are doing all they can to add value to sell-through, while they figure out how to monetize emerging formats like video-on-demand and subscription, rather than transactional, business models.

The First Sale Doctrine is not often loudly invoked any longer, but is relied upon by rental retailers large (Netflix, Redbox) and small every time they buy movies that are unavailable through their distributors at Wal-Mart or Best Buy.

The only current “disruptive innovator” in the industry, fast-growing Redbox, is pretty much a pariah because of its ubiquitous $1 rentals. With the exception of other kiosk companies, there aren’t many retailers decrying the idea of a separate window for vending. There was a less pragmatic time in the past when even arch rivals would have stood up for Redbox’s right to rent.

Posted by Marcy Magiera on March 6, 2009 | Comments (0)