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Warner gives Torino, Into You quick discount

By Susanne Ault -- Video Business,06/18/2009

JUNE 18 | PHYSICAL: Key retailers Target and Best Buy, with the support of the studio, dropped their prices on Warner Home Video’s new release DVDs He’s Just Not That Into You and Gran Torino to as low as $10 just a week after street date. The aggressive pricing moves accelerate a rapid repricing trend that started to gather steam earlier this year.

Target and Best Buy had no comment on their pricing strategies. Warner was not immediately responding.

Sources said Warner made a $5 per unit rebate available to select retailers, which enabled Target and Best Buy to drop the price of the titles so low, so fast.

Coinciding with this year’s recession, studios have become more aggressive with retail financial incentives, as they can boost consumer sales and prevent product returns from retail. Usually, retailers must also agree to extensive upfront product orders to participate in the rebate programs. That is ideal for studios that crave huge title displays at stores.

Warner’s program represents the first high-profile titles being discounted so heavily so soon after bowing. Earlier this year, Paramount Home Entertainment and Universal Studios Home Entertainment raised eyebrows when they let retailers reduce pricing within 30 days of street on Feb. 10 release Madagascar 2: Escape to Africa and March 10 release Milk, respectively.

Many Target stores, including some Los Angeles locations, priced June 9 release Gran Torino at $10 the week of June 14. That marks a steep drop from the $14.99 to $15.99 range that major chains often use for new feature film releases in their first week or two of release. Best Buy advertised the title in its June 14 Sunday circular for $12.99.

In their June 14 circulars, Target and Best Buy also showed June 2 release He’s Just Not That Into You for $10 and $9.99, respectively. A number of retail sources, however, said the $10 pricing on He’s Just Not That Into You began the previous week at some Target locations.

Wal-Mart did not appear to be significantly repricing either Gran Torino or He’s Just Not That Into You. One Los Angeles store had them both tagged at $19.96 as of June 17.

Some retailers worry that those consumers who bought Gran Torino and He’s Just Not That Into You on street date will now be kicking themselves over not waiting just a few days more for the cheaper tags and will be trained to wait for price reductions, rather than buy at or near street date.

“Generally, this doesn’t happen just one week later,” said one retail source. “Consumers will notice, and if studios do this too much, consumers will wait to buy until the title gets cheaper.”

Adrian Hickman, general manager for regional chain TLA Video, said he is considering slimming his orders on studio new releases because of the difficulty in competing with the rebate-driven prices at mass merchants. “I’m afraid the same thing will happen on [Warner July 21 release] Watchmen,” said Hickman. “I’m annoyed about how to figure out how to deal with it. Does it cause me to scale way back on my orders of these titles?”

Indie rental stores also are fearful of speedy studio repricing seriously biting into their previously-viewed disc sales, in which discounting happens about one month after street. Warner expressed its distaste for previously-viewed sales, which competes with studio sell-through business, by recently creating a revenue-sharing plan that curbs rentailers’ used stock.

“This will completely erode the previously-viewed market,” said Todd Zaganiacz, owner of Massachusetts’ Video Zone and president of the National Entertainment Buying Group. “You can get $7 to $10 on a really good used title,” nearly the same price as Warner’s offer several days after titles bow.

Zaganiacz believes that Warner has upset stores and consumers alike with its extra quick repricing.

“Sales are down for DVD, but the studios don’t help themselves by doing this type of thing,” he said. “If they want to increase sales, they should outreach to everyone. And this creates so much confusion for the consumer, where they might throw their hands up in the air.”

Retailers also are concerned that super-fast discounting emphasizes the price differential between standard-definition and Blu-ray Disc, potentially hurting high-definition disc sales.

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