Blockbuster has renewed its revenue-sharing deal with Fox, despite very public disenchantment with some aspects of its revenue-share deals with studios.
The renewal comes just a couple of weeks after Blockbuster and Disney severed their rev-share agreement a year before it was due to expire and then immediately began negotiations on a new deal, according to sources. In the interim, Blockbuster is buying Buena Vista Home Entertainment rental product under standard distribution terms.
Neither Blockbuster nor Fox would confirm the renewal, but Blockbuster CEO John Antioco said during a conference call with analysts last week that the retailer had re-upped with a major studio. Although industry sources identify the studio as Fox, a spokesman for the studio would only say that Fox is in discussions with Blockbuster.
In an interview with Daily Variety sister publication Video Business, Antioco said the deal gives the retailer greater flexibility over the number of copies it stocks of each title.
The deal also contains “provisions relating to DVD,” he said, but he would not confirm whether those provisions include revenue-sharing purchases of movies on DVD. So far, rev-sharing has been limited to VHS.
“We’re not trying to eliminate the upside in these deals for the studios,” Antioco said. “We just want them to reflect current market conditions.”
Although Blockbuster’s first break from revenue sharing involved exercising a contractual option in its deal with Disney to end the agreement early, studio sources said the retailer is also attempting to renegotiate other revenue-sharing agreements that have several months to run.
Those deals are the most economically onerous to Blockbuster because they force the retailer to continue operating under terms it now finds problematic, such as a commitment to purchase a studio’s full rental output.
While the chain attempts to renegotiate studio revenue-sharing deals, it is shifting more of its marketing and merchandising efforts from VHS to DVD.
By the end of 2002, the retailer expects DVD to account for 40% of rental revenue.