Weinsteins, Blockbuster get hitched
In an unusual exclusive arrangement, the Weinstein Co. has pacted with Blockbuster to make the vidtailer the rental outlet for all its releases.
Four-year deal dictates that TWC will not make available any titles through competing rental outlets — including Blockbuster rivals Netflix and Movie Gallery — beginning in January.
In return, Blockbuster will offer front-of-store placement and other marketing exposure for Weinstein titles. Blockbuster also will guarantee payments that amount to a certain percentage of box office.
Move is a coup for the Weinsteins, who in addition to a creative new financing pipeline get added exposure for titles at very little cost.
“The Weinsteins win on so many fronts,” said Salem Partners’ Stephen Prough, a media investment banker who specializes in homevid libraries.
And given the relatively small piece of the business that DVD rentals occupy — figures show the rental biz was down 3.4% last year and now accounts for less than a third of homevid business — it does so in an area with comparatively low stakes.
But deal was about more than just economics and fees, said Harvey Weinstein. “That’s just a basic jumping-off point,” he said. “Everything is going to be earned back quickly. It’s expanding the horizon.”
Weinstein said the goal was in fact to double TWC’s rentals, in part because of Total Access, Blockbuster’s recently announced plan that allows online rental customers to return movies in stores, a feature the online-only Netflix cannot offer.
Deal also gives the Weinstein Co. a retail presence of sorts; the pact could lead to company’s banner filmmakers such as Quentin Tarantino creating content for or appearing in Blockbuster outlets.
Martial-arts actioner “The Protector” is the first release to fall under the deal.
Among the Weinstein Co.’s fall releases are “Bobby,” “Shut Up and Sing” and “School for Scoundrels,” which all fall under the deal. “The Nanny Diaries,” Tarantino and Robert Rodriguez’s “Grindhouse” and Vince Vaughn’s “Wild West Comedy Show” are other upcoming TWC pics that could be big draws for Blockbuster — and non-Blockbuster — customers.
Pact offers titles to Blockbuster with a three-year exclusive window.
Blockbuster will not participate in any theatrical box office for the pics. Deal does not cover DVD sales, and outlets that both sell and rent will be allowed to continue to sell titles.
Titles in the catalog of Weinstein-controlled Genius Products that come from non-Weinstein sources also will not be affected. Genius will manage the partnership.
Pact gives a boost to the Weinstein Co.’s burgeoning straight-to-video business, which recently has taken the form of company strengthening ties with retail giant Wal-Mart.
“Since that’s often product that’s harder to distinguish from competitors, this guarantees (TWC) some base revenues and a real focus on the titles,” Prough said.
For Blockbuster, it’s a bold step as the company seeks to gain an edge over archrival Netflix. Blockbuster is expected to make TWC hits the centerpiece of a marketing campaign to bring new customers into stores and wean them away from the competition, much as it plans to do with Total Access.
Partnership with a company like TWC also expands Blockbuster’s lineup of the arthouse hits for which Netflix has become known.
Experts said move is unlikely to be replicated by larger studios, who are less concerned about creative and inexpensive marketing than about maximizing profits for every title in as many outlets as possible.