LA VERGNE, Tenn. -- In a deal that is likely to extend studio and retailer participation in revenue sharing for rental- priced movies, Ingram Entertainment has signed an agreement to license software from SuperComm, Dallas.
The deal is significant because Ingram has long been critical of the shared transaction-fee method of video distribution. It follows news that Blockbuster Entertainment Group, Dallas, has signed with shared-revenue distributor Rentrak Corp., Portland, Ore., which also competed with SuperComm for the Ingram business.
When contacted, Rentrack Chairman Ron Berger said, "It's a further validation of the revenue-sharing concept. So we view it as a tremendous, positive factor for us."
The deal between SuperComm and Ingram also comes after Buena Vista Home Video, Burbank, Calif., announced plans to make its rental product available through traditional distribution on a revenue-sharing basis -- as a way to increase copy depth at retail. Buena Vista will leave it up to distributors to negotiate data-processing arrangements with SuperComm or Rentrak. Both Buena Vista and SuperComm are Disney subsidiaries.
With shared-transaction-fee programs, retailers pay a fee of $10 or less to acquire a tape, then share roughly half the revenues with the supplier. Although executives at Ingram and SuperComm would not reveal specific details of their deal, it has been reported that Ingram will set its own terms for retailers and pay SuperComm 1% to 3% of each transaction as a fee for leasing the software. Ingram will be responsible for setting up accounts, as well as sales and billing. Rentrak proposed an arrangement where it would set up and bill retailers and pay distributors a handling fee and about 1% of revenues for handling sales and physical distribution, according to reports.
Other distributors are expected to decide on one or the other shared-revenue company in coming weeks, said sources. However, WaxWorks Video Works, Owensboro, Ky., has no plans to offer revenue sharing because of a lack of demand from its retail customers, said Kirk Kirkpatrick, vice president of marketing.
"The supermarket retailers that we have spoken to have been very enthusiastic," said Bill Bryant, Ingram's vice president of sales, grocery and drug. "Revenue sharing offers another option for them. Many retailers already have seized the guaranteed rental opportunity afforded by feature sell-through titles, which lowers the average cost substantially for a title to be brought in as a guaranteed rental. Revenue sharing is another option for guaranteed rentals."
The program is expected to start in June, said Bryant. He would not comment on specific titles, but the biggest hit on the schedule from Buena Vista for that month is "Scream 2," which grossed about $100 million at the box office.
SuperComm was founded in 1992 by retired industry veteran Jack Silverman as a way to provide revenue sharing to supermarkets. Up to now, it has focused on that one class of trade, but the deal with Ingram and possibly other distributors will extend its reach to specialty retailers.
For supermarkets now using SuperComm, it means they will now deal with Ingram or another distributor on SuperComm product, while SuperComm plays more of a background role, said Des Walsh, the company's vice president and general manager. "Around the world, our function is purely that of a software supplier. That's ultimately what our role will become here in the U.S.," he said.
This is mostly good news for supermarket video executives who tend to have a high comfort level with their video distributors, noted industry observers. "For supermarket retailers, it is going to mean a more easily accessible form of revenue sharing," said Walsh. SuperComm's current account base includes nearly 1,800 stores of 30 supermarket companies, he noted.
"We believe it is in the retailers' interest to deal through the distributor for all their needs," he said.
It also may mean more studios making their product available through revenue sharing, said Walsh. And this will benefit retailers. SuperComm now offers rental titles from Buena Vista, New Line and MGM, while Rentrak has Disney, Fox, Universal and MGM product. Both carry a wide array of titles from "secondary" or B-movie studios.
In the past, some studios have been philosophically opposed to shared-revenue programs, while others have been unwilling to partner with SuperComm because of the Disney connection. However, with distributors like Ingram now in the picture, more of the majors may be willing to send their titles out under a shared-revenue arrangement. Industry sources said Warner might be the next studio to try this, and that Fox and Universal might consider using an Ingram-SuperComm program. Meanwhile, with sister company Blockbuster pushing shared revenue with the help of Sumner Redstone, chairman of parent Viacom, Paramount might soon acquiesce, said the sources.
