Warner Home Video is telling its network of wholesale distributors they'll begin dealing with retailers directly in selling rental-priced videocassettes.
According to a report in the daily entertainment journal Variety, Warner apparently waited until its major titles were introduced this winter and spring before dropping the bombshell, adding that Warner will hold back releasing most other major titles until the plan goes into effect come September.
The distributors will still have their hands full before then, with The Green Mile and The Whole Nine Yards due for release in June and July.
Variety also says other studios think this is part of Warner Home Video "trying to maximize its control of all manner of distribution of its filmed content regardless of what method of electronic or physical distribution will be adopted in the coming months and years."
Warner says retailers will be served better by dedicated Warner sales representatives, and that some if not many retailers might even see their costs going down with no middle man in the picture anymore. Warner Home Video executive vice president Jim Cardwell says the "flattening out of consumer demand, the complexities of revenue-sharing programs, and the reduction in the number of distributors through attrition, made us make the change."
Variety says the closing of two big wholesalers (Sight & Sound Distributing and M.S. Distributing) stuck Warner Home Video with millions in unpaid bills. The journal also says many other smaller distributors - such as Major Video, Baker & Taylor, Wax Works, VPD, and ETD - losing Warner titles could accelerate their own doom, since Warner titles mean about 20 percent of the video rental market.
Warner has spent several years moving toward a distributor bypass in favor of direct dealing with major video rental chains. The distributors also were affected by recent years' increases in the number of rental copies for major video titles made available. This happened, Variety says, by selling more videos on a much lower per-unit revenue-sharing basis - cutting into the distributors' traditional high markup business.
