Quote:
Warner launches pricing promotion
Initiative includes catalog, Blu-ray titles
By Susanne Ault -- Video Business, 7/11/2008

JULY 11 | Warner Home Video is launching aggressive pricing initiatives for the fourth quarter, including its most comprehensive Blu-ray Disc promotion yet, say retailers.

Starting early September and rolling through first-quarter 2009, Warner will offer a Blu-ray point-of-sale rebate program with which retailers will essentially be able to order participating catalog titles for around $11.

Even with a retail mark-up on the featured titles—including The Fugitive, Enter the Dragon, Clockwork Orange, The Shining, The Aviator, Road Warrior and Swordfish—the price tag to consumers should be several dollars less than the titles’ current average of $20 to $25 retail price at outlets such as Amazon.com and Best Buy.

In this program, retailers will buy the titles at their present pricing but obtain rebate money back upon the sale of each unit. That should ultimately amount to a relatively inexpensive $11 cost for retailers.

Additionally, Warner will offer rebates, although less extensive, for newer Blu-ray releases, including 300, The Departed, I Am Legend, Ocean’s 13 and We Are Marshall. This layer of the Blu-ray program also will run from early September to the first quarter, according to store sources.

The consumer price for these titles is likely to fall somewhere between $17 and $20. That would still represent a deal for shoppers, as titles such as 300 are now falling between $24 and $30 at outlets such as Amazon and Best Buy.

Warner did not comment by deadline.

Although retailers hope Warner’s Blu-ray strategy will pay off with boosted sales, some store sources worry that the format is becoming devalued too quickly.

“They are trying to get this software business going,” said one source. “But it’s really a double-edged sword. We’re happy to be able to offer it, but it can be a slippery slope. Consumers might get in the mindset that they want everything discounted. If that becomes the case, we will shorten the life of Blu-ray just like we did with DVD.”

At deadline, Newbury Comics buyer Ian Leshin had not yet learned of Warner’s Blu-ray plan. But he seemed to embrace the studio’s strategy. The New England chain found success with Lionsgate’s Blu-ray repricings earlier this year. Lionsgate was the first studio to permanently reprice its Blu-ray titles, including Terminator 2 and Devil’s Rejects, down $10 to a new $19.99 SRP.

“Terminator 2 is our biggest-selling catalog title with the $19.99 SRP,” said Leshin. “It can become more of an impulse thing to buy.”

Warner’s Blu-ray rebate program comes on top of a straight repricing plan for a slew of standard-definition DVD titles that also goes into effect in September. As detailed in a July 2 newsletter to retailers, Warner will drop the price on varying titles to either a $19.96, $14.96 or $12.97 SRP. Some relatively new Warner theatrical DVDs are slated to fall to $19.96, including June 17 release Fool’s Gold and June 24’s 10,000 B.C. The discs originally streeted at a $28.98 SRP.

The $14.96 repricing will span such titles as Harry Potter and the Goblet of Fire and Blood Diamond, and the $12.97 price point will cover titles including Wedding Crashers and Ant Bully.

All studios often reprice titles as they age on shelves, but the retail community similarly has mixed feelings about such plans.

“My first thought is that I like repricings because it does provide our customers with a better value, where they can get the same title for less money and enjoy a better margin,” said Kirk Kirkpatrick, president of video at wholesaler WaxWorks VideoWorks. However, the studios “are repricing a little quickly on some, but they want to get the fourth quarter going.”

One retail executive was less enthusiastic about studio repricings in general, blaming them for unnecessarily encouraging customers to delay purchasing. The executive wishes pricing promotions were shorter in duration.

“Customers get in the habit of seeing the price go down and down, and they’ll get in the habit of waiting longer to buy,” the executive explained. “If you can do something that is very short-term, that will give customers a reason to buy.”