REVENUE SHARING SEEN TAKING BIGGER ROLE

DAN ALAIMO

DALLAS -- For supermarkets in video, Blockbuster's deal with Rentrak means revenue sharing will be less of an option, said industry observers -- competition will mandate it. "Supermarkets are not always proactive, but they sure are reactive. They are going to have to gravitate to pay-per-transaction," said Andrew Miller, national sales manager for the supermarket division of Rentrak Corp., Portland, Ore.

Some large supermarket chains have been proactive about the concept. Leading chains, like Randalls Food Markets in Houston and King Soopers in Denver, have long used the Rentrak program. Last year, when Kroger Co., Cincinnati, decided to consolidate its video suppliers, it recommended that divisions use the revenue-sharing program of SuperComm, Dallas, which is Rentrak's chief competitor.

Besides Rentrak and SuperComm, there also may be a future program offered by one of the traditional distributors. Distributors are negotiating to respond to a Disney initiative, announced last month, to offer shared revenue to all retailers. Details on how this will work have yet to be determined.

Des Walsh, vice president and general manager of SuperComm, is concerned that the Blockbuster-Rentrak deal will lead to widespread adoption of revenue sharing and ultimately to misuse of the programs. "We believe this is a significant development in terms of the acceptance of revenue sharing as a means of growing the rental business. Blockbuster began revenue sharing on a direct basis with certain studios several months ago and it is interesting to see that they are now seeking to extend this method of purchasing," he said.

"If we have one reservation about this development, it is that many retailers may now begin to embrace revenue sharing in circumstances where it may not be totally beneficial," he said. Revenue sharing works best when it is used to increase copy depth and to enhance promotions, not as a one-for-one replacement of other purchases, he said.

"We continue to see revenue sharing as a niche purchasing and marketing tool rather than as an alternative to standard purchasing. Particularly for smaller retailers, acquiring too much product on a revenue-share basis may be detrimental for them," said Walsh.