In a move that has long been expected, Warner Home Video has started its revenue sharing program for DVD by signing up Video City as its first partner. Revenue sharing is a controversial program that gives stores access to releases at a cheaper price than usual rental items while sharing the rental revenues incurred on those titles with the studio. The more titles an outlet offers through the revenue sharing channel, the cheaper the basic stocking cost becomes, which gives major chains an edge over small competitors.

The agreement gives Video City an immediate push and according to a spokesperson, the company will be able to quickly offer between 800 and 1200 DVD’s for rental.

The agreement is effective immediately with the first DVD revenue sharing title to be carried by Video City being The Matrix. Video City plans to extend the copy depth program to the West Coast Entertainment stores upon the closing of the merger, which is scheduled for December 1999.

Which effect does this have on consumers? None, other than increased rental availability of titles. The reason chains like “Blockbuster” can have their video availability guarantees has been made possible only through such revenue sharing programs. While its business practice may be questionable, the result of revenue sharing programs for consumers is not. However, with a significant growth in rental revenues for the studios as part of such programs it may be likely that at some point we maye see selected rental-only releases first, followed by sell-through titles, a model that has long and successfully been installed in the video industry. That however remains to be seen.