Genius chief: Exposure key to Blockbuster deal
Exclusive can’t ‘prohibit someone from walking into Costco’ to buy copies
By Susanne Ault -- Video Business, 11/22/2006
NOV. 22 | The Weinstein Co. earlier this month struck an exclusive direct sales deal with Blockbuster Video for the rental channel and trumpeted the pact as an “exclusive U.S. rental right." Trevor Drinkwater, CEO of TWC distributor Genius Products, spoke with VB’s Susanne Ault about the company’s understanding of the First Sale Doctrine and how Genius plans to capitalize on the Blockbuster deal.
Drinkwater
VB: How can this deal really be exclusive with the First Sale Doctrine in place? What’s stopping rental stores from buying Weinstein titles at retail and then renting them?
Drinkwater: With the First Sale Doctrine, there’s nothing we can do to prohibit someone from walking into Costco and buying the DVD and renting it. That’s clear under the law. What we can do as a distributor is brand all the Blockbuster DVDs with the Blockbuster logo, and all the DVDs that are out for sale will be clear to consumers as being for sale only. We’ll encourage people to call us if they did rent [a DVD that is labeled for sale]. That’s to help control it. But we have a clear understanding of First Sale, and we aren’t going to do anything that goes around it at all.
VB: Because it is tough to ensure exclusivity, what are the real advantages in aligning with Blockbuster?
Drinkwater: Harvey and Bob [Weinstein] have been very prolific in producing and acquiring lots of different titles from an esoteric independent film all the way up to a Scary Movie 4. The frustration point is their ability to get those films exposed. There have been lots of direct-to-DVD films that are fantastic, and if retailers get behind them, we could find a market for them. Now Blockbuster is offering a way to support a wide array of content. Typically in the past, rentailers have just supported major theatricals.
VB: How will Blockbuster promote TWC titles?
Drinkwater: I expect there to be a fully integrated marketing plan from pre-theatrical all the way to video. For direct-to-video, there will be a high level of exposure, as Blockbuster will be recommending them as good films to rent. It gives Harvey and Bob a direct link to the consumer. This agreement allows The Weinstein Co. to fully expose the titles, from small independents to large theatricals.
VB: Are you concerned that Netflix and other rental stores will try to penalize you for the Blockbuster deal by not taking your non-Weinstein Genius product?
Drinkwater: I want to be very clear that this is a deal between the Weinsteins and Blockbuster. This is not a Genius Products deal. We are a very big supporter of Netflix. We believe we have a lineup of content that plays very well at Netflix and other rentailers, including our distribution agreement with the Independent Film Channel. At the end of the day, [Netflix and others] not supporting any one of our distributed lines won’t hurt either Harvey or Bob, so there is not a lot of logic there.
VB: How will you enforce the exclusive with wholesalers who have both sell-through and rental accounts?
Drinkwater: When we work with a wholesaler, we will sell [TWC] product that they can sell to their primary sell-through accounts. We believe our partnership with wholesalers will mean they honor this relationship. And we hope they will support what we are trying to accomplish here.
VB: Are you assigning a specific dollar value to the Weinstein-Blockbuster deal? How much will Genius’ Weinstein rental revenue increase in 2007 from 2006 as a result?
Drinkwater: There are minimum guarantees attached to it, and we believe this ensures the Weinsteins a good return off the rental channel. However, the deal wasn’t done off of the minimums. It was done based off of what they think they could gain in exposure on a wider lineup of content. Harvey believes that over time, they will see a significant increase in the rental business with this collaboration. Obviously, there will be a much higher increase on direct-to-video titles [which tend to get minimal exposure at rental].
VB: What can you say about expected copy depth on TWC titles at Blockbuster?
Drinkwater: We believe there is ample incentive on both the Weinstein side to provide unique value and support and on the Blockbuster side to make sure the consumer has ample opportunity to rent the titles. The benefit for Genius is that under this agreement, we’ll have consistent support at the rental channel for the next four years. There’s a lot of volatility in the rental business.
VB: Might the visibility of the TWC deal spill over to boost other Genius titles at Blockbuster?
Drinkwater: We hope so. We really enjoy our relationship with Blockbuster. The best way to gain support from retailers is to provide value and provide programs that are profitable, and we’ll continue to do that.
VB: Considering Blockbuster’s recent financial troubles, how do you feel about Blockbuster being able to keep up its end of the deal?
Drinkwater: I’ve always been a big supporter of the management team over there. I think they’ve proven in the last couple of quarters that their business is starting to strengthen. I believe the strategies that they are now putting into place should bear some significant benefit to them short-term and long-term. I think the rental business is on pretty sure footing right now, at least in the short-term. We believe that Blockbuster is positioned well to take advantage of that.
