Retail giant's DEJ finds direct-to-video niche

Blockbuster Entertainment-backed DEJ Prods. is carving a new niche in the direct-to-vid arena currently dominated by major players including Artisan and Lions Gate.

A producer and supplier of genre films for video, DEJ was created by and is managed by the video rental giant. Able to target audience demographics using its extensive customer database and to leverage the advertising potential of its parent company, Viacom, the company is emerging as one of the most important distribution partners in independent film today.

Company is run by Dean Wilson, the executive VP at Blockbuster Video who decides which movies the retailer will buy and promote in its 8,000 stores worldwide. (The other initials stand for Blockbuster corporate counsel Edward Stead and company CEO John Antioco.)

DEJ’s growing production slate could become a concern to smaller producers, who worry that Blockbuster will not buy as much product from them now that they have their own internal feeder company. The chain represents about 50% of their potential retail distribution and revenue, meaning in order to survive reduced or no orders these producers must cut production budgets even further.

And Blockbuster is renegotiating its overall revenue-sharing contracts with all the major studios. With the retail terrain changed due to the onset of DVD, the new deals will almost certainly result in the retailer not being required to accept as much “B” product as the studios have previously demanded.

Growing slate

While most purveyors of indie pics, including Artisan and Lions Gate, release anywhere from one to three titles each month that have had little or no theatrical distribution, DEJ is now putting out as many as five or six. The company is also gearing up to produce a slate of its own productions.

Last year, DEJ put out 70 titles on video, many of them video premieres. This year the company expects to acquire 90 films, Wilson said.

Most of the films acquired and distributed by DEJ are lower-budget productions, with a growing number of them in the urban or Latino genres that have become the hot market for venerable indies like York Entertainment. They also include thrillers and horror films that make up much of the video-premiere release slate of companies such as Miramax and Dimension.

So far, so good

So far studios and bigger indies say that Blockbuster has continued to bring in roughly the same amount of their secondary product.

Interestingly, those revenue-sharing deals are what sparked demand for more video premiere product at Blockbuster and other retail stores.

“We’ve tripled the number of titles coming in (to Blockbuster stores) since revenue-sharing was implemented in 1997,” Wilson said in an interview with Variety sister publication Video Premieres. “That has resulted in a need for more product than is spun out of the theatrical food chain.”

With Blockbuster often the biggest buyer of indie films at markets like the Sundance Film Festival, many independent producers are thrilled to have such a strong new buyer in the game.

“DEJ is one of the few companies left that still supports the independent producer,” says Avi Lerner, CEO and co-chairman of Nu-Image, which recently signed a multi-picture deal with DEJ to premiere its “American Heroes” series of military-themed action films on video.

“They’ve rescued many a film that wouldn’t otherwise have seen the light of day, and that’s sensational for independent filmmaking,” says Lloyd Segan, who’s 1999 Willem Dafoe starrer “Boondock Saints” ranks as DEJ’s most successful video.

Marketing maven

As a career-long retail goods packager, Wilson admits he doesn’t fit the typical profile of one of the most busiest acquisition and distribution executives on the independent film festival circuit these days.

“I haven’t once looked through a camera, and I’m not out there running around with a clipboard on film sets,” he said. “I’m up in my office all day with a computer and a telephone.”

After one screening of “Boondock Saints,” Wilson bought the film, then proceeded to arrange a one-month theatrical window for it in several major markets. Blockbuster promoted the movie at its stores prior to its video release, when several million VHS copies of “Saints” were rented at Blockbuster stores.

Segan is now in negotiations with DEJ to produce a sequel to “Boondock Saints.” “Just in video alone, you can make $25 million,” he explains. “And if your film’s successful, you will see rewards … they pay their bills, whereas big studios sometimes take all the money.”

Although DEJ titles were initially offered exclusively at Blockbuster, most are now also distributed to Blockbuster retail competitors like Hollywood Video. In fact, with DEJ, Blockbuster is not only a buyer of films but also a seller of DEJ titles to the same companies it buys from like Artisan and smaller suppliers like Ventura, Victory and First Look.

DEJ looks for films developed for the theatrical market that for whatever reason don’t make it. The company also uses the knowledge gained through its massive customer base to select titles in the genres that rent best: action, horror and urban.

But Wilson noted that these are only loose selection guidelines, that his team is guided primarily by a keen understanding that video consumers like — and are now open to — surprises.

“Consumers understand that a film doesn’t always have a theatrical release.”

Wilson says DEJ has plans to expand beyond mere acquisition and distribution. While he wouldn’t disclose details yet, he says the company is now venturing into the film development and production process.

“We’re good at packaged goods,” he says. “Our experience in video enables us to accurately estimate the performance of a title.”

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