Monday, January 16, 2006

Is Lee Scott The Most Powerful Man In Hollywood?

Musings from yours truly in last week's HuffPo:

It was widely reported last year that Robert Greenwald’s decision to self-finance part of his Wal-Mart movie was prompted in part by the defection of two film industry investors fearful of retribution from Wal-Mart.

Does Wal-Mart carry that much power in the entertainment industry? Yes. Do they use this influence to squelch dissent? Let’s see.

The sale of DVD’s is currently the engine driving the filmed entertainment industry. According to Variety, Pixar’s The Incredibles generated $355 million in home video sales, a figure 35% higher than its theatrical gross. In many instances, theatrical releases serve as little more than trailers for the DVD, which is where the real money is.

It is well-known that Wal-Mart is responsible for between 40-45% of all DVD sales in the U.S. 138 million people pass through their 3,300 stores every week, generating wide exposure and sales for DVDs. Jeffrey Katzenberg makes frequent trips to Bentonville to put on the blue vest and ply his wares. That’s how important they are.

So who makes the decision on what films Wal-Mart carries? In large part, Time Warner Home Video.

As counterintuitive as it sounds, Time Warner Home Video has served as “captain” of the video department for Wal-Mart for several years, providing sales data and DVD buying recommendations to the company, basically rack-jobbing the DVD department. This is not an unusual arrangement. According to Videobusiness magazine, 20th Century Fox Home Video provides the same “captain” services to Target, the #2 retail outlet for DVDs, and may take over that role for Wal-Mart.

Videobusiness states “execs say the role of captain is coveted because it allows the studio to have influence on the strategic direction and growth of the entire industry.”

This is not to say Wal-Mart does not make decisions regarding specific titles. Wal-Mart, or its captain, chose not to carry Mr. Greenwald’s anti-Wal-Mart film, although they offer over 20 of Mr. Greenwald’s other films on their website.

But surely my pro-Wal-Mart film “Why Wal-Mart Works” would be a shoo-in for the Wal-Mart shelves, right? Wrong. They’re not carrying that either.

So should filmmakers fear that by creating or backing certain content, they risk their chances of being carried at Wal-Mart?

Ask Time Warner.