VSDA EVENT SPAWNS WAR OF WORDS OVER TRADE PRACTICES

DAN ALAIMO

LAS VEGAS -- Customer satisfaction and retailer dissatisfaction were the subjects of a war of words at the Video Software Dealers Association convention held here earlier this month.

On the first day of the July 8 to 11 show, independent retailers held a rally away from the Las Vegas Convention Center, where Bob Webb, president of the Independent Video Retailers Group, Decatur, Ill., alleged improprieties in deals between the major studios and large video specialty chains. Retailers at the meeting also voiced their unhappiness over the VSDA's lack of responsiveness to their situation, not allowing them to hold the rally as part of the official convention.

Many supermarkets have been as affected by the competitive pressures of the new marketing strategies of chains like Blockbuster Entertainment, Dallas, as the [small- to medium-sized] specialty stores, retailers have told SN.

On the second day of the convention, during the main business session, a besieged Jeffrey P. Eves, president of the Encino, Calif.-based VSDA, and John Antioco, chairman and chief executive officer of Blockbuster, had their say.

"We have no, zero, nada, nil exclusive deals and no favored-nation clauses," said Antioco. "We have done nothing contractually or otherwise to prevent the studios from signing deals -- even better deals -- with other retailers, large or small."

Antioco noted that Blockbuster spent $50 million more than on its normal product buys to launch its "Go Home Happy" guaranteed-availability promotions to prove to the studios that satisfying the customer with copy depth would work. He also said "misinformation" about Blockbuster keeping up to 70% of the revenues in shared-fee arrangements was "grossly inaccurate." However, that particular "misinformation" was attributed in a direct quote to Sumner Redstone, chairman of Blockbuster parent Viacom, New York, in the June 15, 1998 issue of Forbes magazine.

"We don't expect our gross margin on rental product to increase from traditional buying methods. All of the upside must come from growing the business," said Antioco.

After noting that the VSDA counts both the big studios and specialty chains as members along with its core membership of independent retailers, Eves said the association could play a role in mediating the conflict. He said a "blue ribbon" task force has been formed to research the issue and report back at the Oct. 6 to 8 East Coast Video Show in Atlantic City, N.J., which the VSDA now owns a share of along with Advanstar Communications Inc., Cleveland.

The VSDA has committed $100,000 to fund the work of the task force, said Eves. "If the work of the task force or the results of the study demonstrate a blatant lack of competitive fairness in our industry, it's our job to bring that information to the surface and address it in an open, constructive way with all participants in the home video industry with the clear objective of implementing an appropriate remedy," he said.

"VSDA is a big tent, the one place where the interests of all come together: large retail chains and individual independent entrepreneurs, studios and distributors, those who swear by revenue sharing and those who swear at it," said Eves.

"An industry trade association has obligations to many different constituencies, which must always be kept in balance. Our influence in the larger world derives from our ability to speak with a single unified voice on behalf of all our members," he said.

That is why the VSDA thought it important to segregate the independent retailer rally from the official convention. "If there are those among you who believe sincerely that the rules have been broken, then it's your obligation to pursue whatever avenue of remedy you think appropriate. But I believe those efforts are best kept beyond the official purview of VSDA," said Eves.