Fox limits Star Wars orders
Retailers getting 20%-30% below orders for Sith
By Susanne Ault -- Video Business, 9/23/2005
SEPT. 23 | In the wake of the high volume of returns that hit DreamWorks Home Entertainment and Buena Vista Home Entertainment on Shrek 2 and The Incredibles, respectively, 20th Century Fox Home Entertainment is clamping down on shipments of Star Wars: Episode III—Revenge of the Sith.
Each retailer is getting a studio-dictated allotment of the final title in the Star Wars film series for its Nov. 1 bow, regardless of how many copies they might desire. Fox maintains that allotment decisions were not based on a perceived softness in the market, but many retailers interpreted the quantity decisions as such. Fox declined to give specifics, but limitations are apparently being leveled across the board to large and small wholesalers and retailers. Quantities will vary depending on the size of the retailer. A number of store buyers say they are receiving 20% to 30% fewer copies than they think they need to satisfy street week demand for the film, which grossed $380 million at the box office. Some retailers speculate that production company Lucasfilm is leading the drive to limit shipments, but Feldstein said Fox was involved too. “This is a joint decision [between Fox and Lucasfilm] that’s not out of the ordinary for a Star Wars title,” Feldstein said. “We have high hopes for this movie and look forward to another year of continued growth.” Fox also doled out Star Wars Trilogy to accounts based on preset parameters. Store performances on past A-list Fox titles, including The Day After Tomorrow and the Star Wars Trilogy, are dictating the Revenge of the Sith allotment amounts.But many stores are perplexed that Fox is corralling shipments on such a critical fourth-quarter title.
Trilogy rolled out at about the same fall frame last year but was considered a more limited collector’s gift item. Revenge of the Sith is believed to be a mainstream mega hit for retail.
Fox declined comment on street date shipment specifics for Revenge of the Sith. But the studio assures it won’t let stores go empty handed.
“Initially, the right amount of product is being placed,” Fox senior VP marketing communications Steve Feldstein said. “At Fox, our supply chain systems are extremely sophisticated, and we can replenish within 24 hours where needed.”
Details are unclear about how Fox will choose to reload store stock following street week.
“Meetings are still going on,” said a retailer. “Fox is very famous for transferring product around in the industry. If Best Buy is sitting on an extra 50,000 copies, that might get transferred to Target. But [the exact movement transactions] would be invisible to the retailers.”
A number of retailers have successfully fought to get their Star Wars allowances raised over the last couple of weeks. One regional chain was dealt a 60% less-than-wanted blow. But the retailer managed to lift its order to about 20% fewer copies than originally hoped.
“I kicked and clawed and got them to up the allocation,” a buyer at the chain said. “This is the first significant example of [copy] restrictions on a title. There’s nothing where we have felt under this sort of immense pressure.”
While feeling somewhat burned, retailers are trying hard to take everything in stride.
“We got [the Revenge of the Sith shipment] increased, but we are still disappointed,” said another retailer. “But this is a change of philosophy. If you look back at blockbuster releases over the last couple of years, studios thought they would break sales records. Now they have to eat a lot of the [unsold] product. So they are protecting themselves. They are seeing what happened with Pixar and DreamWorks.” Retailers concede that studios’ motivations in asserting inventory control are sensible.
Wall Street pounded DreamWorks and Pixar for accepting hefty returns on Shrek 2 and The Incredibles, respectively. Although retailers determine copy orders, the studios are financially on the hook for any unsold product.
“We’re looking for the fourth quarter being strong, and we want every bit of [title] ammunition available,” said Frank Wolbert, senior VP at wholesaler Baker & Taylor Entertainment Group. “I do want to provide my customers with enough product. But there have been a couple of high-profile titles that were overshipped. It’s hard to gauge the legs of a title at retail right now. We can’t fault Fox for wanting to be very aware of what is going into the market.”
Baker & Taylor handles many grocery and mass merchant accounts.
Compounding the allotments is this year’s slow summer business. Retailers are craving a hot title, with such woes as high gas prices, Hurricane Katrina and a maturing DVD industry likely to eat into fourth quarter revenue.
“Customers are telling me this is the softest summer since the inception of DVD,” Wolbert said.
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