VSDA CONVENTION

LAS VEGAS -- The state of the home video industry is "good," Bo Andersen, president of the Video Software Dealers Association, Encino, Calif., told retailers gathered here for the organization's 19th annual VSDA Convention & Expo, July 8 to 10.Andersen made the statement facing a visibly scaled down trade show floor from past years, a shrinking independent retailer membership, an industry that has

LAS VEGAS -- The state of the home video industry is "good," Bo Andersen, president of the Video Software Dealers Association, Encino, Calif., told retailers gathered here for the organization's 19th annual VSDA Convention & Expo, July 8 to 10.

Andersen made the statement facing a visibly scaled down trade show floor from past years, a shrinking independent retailer membership, an industry that has matured in its life cycle and new technologies that threaten retail sales of both rental and sell-through. Speaking at the opening general session, July 8, Andersen addressed a packed small room of 800 to 1,000 retailers, distributors and studio executives. Among the crowd were some retailers sporting red baseball caps with the slogan "Protect Our Window." The initiative, supported by the VSDA, was a symbolic gesture of concern by retailers for the testing of video-on-demand technology and rumors of simultaneous release of motion pictures on pay-per-view and home video on some titles. Red caps were distributed en mass during the final day of the convention prior to the Studio Summit session. Warner Bros. was one studio said to be contemplating the test of pay-per-view at the same time as the video window.

"Our window is our franchise," said Andersen. "We will not sit idly by if anyone attempts to shrink or extinguish it. We should be in complete accord with our studio partners on this. Sequential distribution is the right model for our industry as much in this decade as in the last," he said.

Besides protecting the home video window, retailers are also concerned about revenue-sharing programs and holding the line on DVD pricing. DVD is viewed by most as the salvation of home video and the engine that will drive the retail home entertainment business in the next decade. Indeed, the prime focus of this year's VSDA convention was the unprecedented growth of DVD as packaged media. During the session, the VSDA recognized both Warren Lieberfarb, president of Warner Home Video, Burbank, Calif., and Ben Feingold, president of Columbia TriStar Home Video, Culver City, Calif., with the "Persons of the Year" award for their promotion of the single DVD format.

"Our studio partners brought us the gift of DVD. And in the hands of men like Warren Lieberfarb, what a gift it has been!" said Andersen. "We know for sure that consumers will continue to respond faster than they ever have before with any consumer product + when you couple the world's finest motion pictures with extraordinary fidelity, random access, portability and enriching supplemental content."

Anderson went on to note that VSDA members should be shocked and challenged to learn that of those millions of consumers considered TV-movie watchers (time spent watching hour-long or longer drama programming on TV) less than 10% of them watch home video. In an effort to shift the entertainment viewing process to home video, the VSDA previewed a new $1 million category campaign of radio and 15 second TV spots created by J. Walter Thompson. The campaign, themed "Don't just sit there. Rent something!" will be tested in several markets. Said Anderson, "What we want to do is to remind them [consumers] what they already know -- that home video is their best entertainment fix."

He pointed to the American Film Institute's "100 Years ... 100 Laughs" CBS broadcast earlier this year as evidence that entertainment viewers can be moved. AFI's "100 series" has been successful in renewing interest in older catalog titles. During the two weeks surrounding AFI's broadcast, catalog rentals more than doubled turns on AFI's "Top 100" comedies, Andersen noted.

Especially with the advent of greater copy-depth through revenue-share programs, Andersen called for the studios to support post-street-date advertising in order to further boost rental revenues, which fell from $3.10 billion to $3.08 billion last year. Although Andersen recognized the sensitivity that the majority of the VSDA membership of independent retailers has to the large specialty chains -- mainly Blockbuster and Hollywood Video, he praised those specialty chains for investing heavily in advertising and promoting home video.

Andersen called for "equal access to copy depth on economic terms that make sense for independents." This monthVSDA launched a revenue-sharing test among 50 independent retailers to test the viability of such programs for independents. The VSDA's Independent Retailers Council called the project "the most important project VSDA has undertaken." Noting that VSDA considers the revenue-sharing tests a key investment in its future, Andersen pointed out the association is investing heavily in the project.

He also called for a transaction reporting system for all studio product to be made available to every independent retailer who chooses revenue sharing. "The single greatest advantage held by chains over the independents electing to use revenue sharing is the technical ability to report the required data for all studio products," said Andersen. Too little attention has been given to this problem by the studios, he said. Making available sales data on all studios' releases immediately "will help level the competitive playing field."

The challenge that faces the home video market is "growth in maturity," said Andersen. To embrace that challenge retailers must have a plan to leverage new technologies like opportunities offered through the Internet "to grow awareness, satisfaction and user-friendliness for customers," concluded Andersen, who urged the audience not to be apathetic or negative in going forward.

Also during the general session, Academy Award winning actor Gregory Peck received the "Lifetime Achievement" award. Peck's son Anthony accepted the award for his father, who was taken ill.

Amir Malin, co-chief executive officer of Artisan Entertainment, N.Y., delivered the keynote address and spoke on cost cutting changes that must be made to the traditional studio system to survive in today's multientertainment environment.

Next year the convention will run Jan. 6 to 9, 2001 here.