Video Retailer Pays for Early 'Rings' DVD Sales

[Jakanden]

Video Retailer Pays for Early 'Rings' DVD Sales

By Brett Sporich
May 21, 12:45 AM (EDT)

LOS ANGELES (Hollywood Reporter) - Video retailer Electronics Boutique is in hot water for allegedly selling DVDs of "The Lord of the Rings: The Return of the King" 10 days before the official May 25 release date.

Warner Home Video, the DVD distributor of the Oscar-winning title, has suspended all home video shipments to West Chester, Pa.-based EB, which controls about 1,000 retail stores in malls across the country and about 500 additional stores overseas.

"Violations of street date are all too common in the highly competitive home video industry," WHV senior vp domestic sales Jeff Baker said, "but what makes this case unprecedented is that EB and its store managers not only refused to pull the DVD from the shelves, but the company's executives have refused to cooperate or even discuss the issue.

"I've been in the video business since 1979, and I have never seen such a blatant violation of street date," Baker said. "We are not going to let them get away with this, and we are discussing the issue with our attorneys to consider every possible option."

EB officials could not be reached for comment. Warner Home Video executives said they don't believe any of EB's overseas stores are violating release dates.

Warner, which is the DVD and VHS distributor for its sister company New Line Home Entertainment, first received word of EB selling the "King" DVD before its release date on the studio's retailer hotline, Baker said.

Reports came to WHV from competing retailers large and small, complaining that EB was effectively stealing their business, Baker said. "The callers told us that the DVDs were blowing out the doors at EB, and we have verified several of these reports."

Without question, the "King" DVD is a prime release for EB's core consumers: video game buyers. "Obviously this title is right up their alley," Baker said.

As news of the release-date violation spread during the weekend and this week, there was some speculation that EB was using the DVD as a "loss leader," meaning that they were selling it for less than cost, a legal business practice in the United States.

However, Baker and others have said that EB stores have been selling the double-disc "King" DVD for $24.99, just under WHV's suggested retail price of $29.95, meaning that EB is not selling the title as a loss leader or under the wholesale price.

An informal survey of EB retail stores found that the "King" DVD had allegedly sold-out or was no longer on store shelves.

EB is scheduled to announce first-quarter results Thursday in a call with Wall Street analysts.

In the immortal words of Michael Kelso - BURN!!!