Indie retailers embrace Blu-ray revenue-sharing

PHYSICAL: Suppliers see programs as opportunity to grow format

By Susanne Ault -- Video Business, 5/8/2009

MAY 8 | PHYSICAL: Blu-ray Disc revenue sharing is still rare among the major studios, but indie suppliers are rolling out sharing programs as a way to increase Blu-ray copy depth in stores.

In recent months, Anchor Bay Entertainment, Magnolia Home Entertainment, First Look Studios, E1/Koch and Summit Home Entertainment all have begun offering revenue sharing through Rentrak, with stores splitting rental fees with the suppliers in return for deeper copy depth. Most are choosing to fashion plans on a title-by-title basis instead of via a year-long output program.

Anchor Bay’s May 5 release Last Chance Harvey and Magnolia’s May 19 Eden Log are among those studios’ first Blu-ray rev-sharing options. Summit began rev-sharing with July 2008’s Never Back Down on Blu-ray, and recently did the same with Twilight.

Out of the bigger studios, just Sony Pictures Home Entertainment and Lionsgate have launched widespread rev-sharing on the now 3-year-old high-definition format.

20th Century Fox Home Entertainment, Paramount Home Entertainment, Warner Home Video and Universal Studios Home Entertainment offer revenue sharing through Rentrak for DVD but not Blu-ray.

Studios rarely talk about the details of their revenue-sharing agreements. But sources indicate that for a number of studios, the Blu-ray rental business is considered too small to invest resources in managing programs for the format. Rentrak, through its information service division, just started tracking Blu-ray rental volume in the first quarter.

“It’s a timing issue, and they feel like it’s too soon to go down that path,” said one source. “But studios that are in it do see value in getting more Blu-ray out to consumers.”

Indie studios that share Blu-ray revenue believe the format can best be strengthened by heightening its profile in as many places as possible.

“We are committed to both growing the format and ensuring Blu-ray is readily available to consumers,” Anchor Bay president Bill Clark said. “Therefore, we offer both standard-def and Blu-ray to all of our accounts and through multiple programs, thereby making sure it is readily available to consumers at all destinations on either a purchase or rental basis.”

Summit president Steve Nickerson said, “It’s just something we decided to do to support the rental dealers and help get the format up and going.”

Rentailers who have taken studios up on rev-sharing plans say they can afford to stock up to four times more copies on a Blu-ray title than they would without such a program. As Blu-ray is a premium-priced product order (typically costing $5 to $6 more than DVD versions), coupled with nascent consumer support, video stores are normally conservative with their purchases.

“Revenue sharing helps you bring in more copies and helps make Blu-ray more of a presence in stores,” said Tom Paine, owner of Redmond, Wash.’s DVD Now! chain. Normally, “you are bringing in onesies and twosies—you have to be careful with it.”

Paine was able to make a Blu-ray statement in rev-sharing Anchor Bay’s Last Chance Harvey.

“It is a chicken or egg thing—we know that the business is [small]. But the more exposure we can give Blu-ray in stores the more successful it will be,” he said.

National Entertainment Buying Group president Todd Zaganiacz hopes more studios jump on board Blu-ray rev-sharing.

“If you really want to increase the format, and get it into retailers’ hands, offering some incentive for them do so works best,” Zaganiacz said.