Fallout From The Riots: Trade Reaction

Friday, August 12 2011
Fallout From The Riots: Trade Reaction

“The fire which started at the Sony DADC UK Distribution Centre in Enfield, UK just before midnight on 8th August is at this time still smouldering and the London Fire Brigade remain at the scene. The levels of smoke are restricting any access to the site and consequently no assessment of the damage has yet been carried out by surveyors.

“We are working very closely with our customers and based on their release schedules, 1.5million discs are in the process of being remanufactured at both our manufacturing sites in the UK and Austria. In addition, we are extending our direct to retail distribution from our UK manufacturing site to reduce shipment delays – discs which are currently in our inventory have already been shipped today and the first of the remanufactured discs from the stock affected by the fire will be delivered tomorrow.

“We are already studying a number of medium to long term solutions of alternative site options for business continuity and in this context we have received a number of offers of support from Sony affiliate companies, local distribution centres and other companies from within the industry.”

Sony DADC statement

“It’s been an awful week – truly awful. I couldn’t believe it on Tuesday morning when immediately after hearing the traffic news and an Enfield warehouse fire causing travel mayhem and then getting the call to say Sony DADC was on fire. I could see the smoke from my house and subsequently from the office windows where we have seen black smoke rising for two days. All our retail stock has gone and we’re working frantically to re stock and get back into the business. At times like this we’ve been truly touched by the kind words and offers of help by our customers. All of them have been understanding and readily available to adapt and help. Manufacturers and suppliers have also been great and most notably Sony who within hours had developed a plan and a way forward. With all this help and understanding we will have product shipping out again next week and the plans for our chart titles over the forthcoming weeks will not be affected. I can only end by saying the entertainment industry family has really worked together this week and we’re very grateful to one and all. Just as a final bit to that story my brother is a fire fighter – he works out of Chingford and on Tuesday spent all day at Sony.”

Paul Archer, Clear Vision

“With respect to Sony, we obviously lost all our stock – which is a real blow to us and Sony as we have outstanding orders from accounts that we are not able to fulfil.   Sony have been very good at keeping us informed and working through a solution and we hope that they, us and the rest of the industry can get back on their feet pretty quickly from what was mindless theft and vandalism.”

Spencer Pollard, Kaleidoscope

“We’ve been very impressed by Sony’s reaction and rapid response. Fortunately duplication and master storage was at a different site and they’ve already begun duplication on back cat as well as continuing with new release for both our catalogue and the labels we handle for sales and distribution, our key releases for August had not yet arrived at Enfield so they are being shipped directly to stores. We also wanted to say how grateful we are for the support of retailers – they’re working closely with Sony to ensure deliveries get through in time to get on shelf.”

Jezz Vernon, Metrodome

“DVD is still a strong revenue stream for us – we have lost around 50,000 DVDs, equivalent to potential lost revenues of £300,000.  Dogwoof’s pipeline of new product is unlikely to be affected but steady sellers – such as The Age of Stupid, Restrepo and Food Inc – will be hit hard. Nevertheless, I am very confident that any losses will be covered by Sony’s insurance, who are handling this in such an amazing way. We’re lucky to be working with them.”

Anna Godas, Dogwoof

“When I got the first email at about 5am, the initial shock was terrible,

“You think the worst, but to be fair, Sony has been unbelievable. They had a contingency plan and they’ve been sorting out bestsellers and distribution.

“With Go Entertain and others [such as The History Channel] between us we had 300,000 units there. It’s nothing compared to the likes of 2 entertain, Sony and those guys.

“It’s our Amazon and HMV business that will be the most disrupted. A lot of our Q4 business is special packaging and goes direct from other manufacturers. We don’t know how much it’s going to cost us. We’re not as heavily reliant as some others.

“What’s most important is that everyone is all right. All the alarms were going off and when people first arrived [on the scene], there were kids everywhere, roaming around the whole [industrial] estate. It’s a shame, it was one of he most high tech distribution centres in the world.

“As long as everyone pulls together, Sony’s competitors, replicators, manufacturers are offering their help.

“We had Sony DADC in our office at 11am on Tuesday morning, it’s our business, it’s their business and we’re aiming for minimal disruption.”

Neil Harrington, Go Entertain

“Sony DADC is doing a fantastic job.

“But unfortunately, getting the stock in, it’s going to be four to six weeks before everyone’s in.

“It’s just lucky it didn’t happen in October, it would have killed everybody. At the minute, capacity across the industry is under production. Rival companies are helping too.”

Ron Benson, Eureka

“It’s business as usual in the long term.

“In the short term, a slight pause to replace stock means a big dent in cashflow – lost sales plus replication costs (even though insurance might kick in for quantity of lost stock, there’s a ridiculous minimum quantity we have to replicate even if we don’t need that many units of a particular title).

“We’ve lost over £100,000 worth of stock (at retail price) which might not sound a lot to readers, though for niche company operating in a declining market in already depressed economic conditions, it hurts hard.

“We’ve had lots of messages from our supporters and some are even organising events and promotions to help us – it re affirms our ethos of communicating and interacting with our customers. You wouldn’t get this response for studios would you?”

Joey Leung, Terracotta

“It is estimated that we lost just over 120,000 units of stock in the fire that engulfed Sony’s warehouse on Tuesday morning.  Amongst the losses were a number of bespoke DVD and Blu-ray editions. Fortunately a percentage of our stock is held at another location and is unaffected.  We will continue to supply retailers as best we can and our upcoming release date of August 22 will remain unchanged.  Our stock holding is fully insured by Sony and their response has been nothing short of fantastic, with a huge effort being made by them to return things to normal as quickly as possible. The Enfield distribution centre was the main hub for many independent music and film labels and the total losses are obviously huge. We sympathies with all the companies affected and we hope that everyone is able to recover quickly.”

Ben Stoddart, BFI

“On behalf of the whole team at Network I’d like to thank everybody who has contacted us following the fire at the Sony distribution warehouse on Monday evening with messages of goodwill and support. We are genuinely moved.

“Whilst the loss of stock (and mercifully only stock) is regrettable, I’m happy to reassure everyone that the interruption in supply will be short term and is the only aspect of the business affected.

“Whatever was lost that night is completely replaceable as we have asset backup for all our projects. As the manufacturing base is elsewhere, replication is also unaffected but it will, however, take a while to replenish the catalogue. As you will appreciate, demand for services is currently at a premium but the staff and management of Sony are working tirelessly to action their contingency plans to restore all services as quickly as possible in what are exceptional circumstances. We are very happy to pledge our continued support for them.

“I am pleased to say that, although ironically we don’t have any stock ourselves, one of our most eagerly anticipated releases, The Strange World of Gurney Slade, will meet its release date next Monday and you can order it from Amazon, Play and other online retailers. It is an incredible series, worth waiting for, and would urge you to order it now as stock is limited for the time being.

“Elsewhere in our company it is business as usual as we continue to work on our forthcoming titles for the remainder of this year and beyond. The release schedule is always full and your continued support allows us to ensure that it remains so; in fact just this week agreement was reached for a series of titles that archive television fans will be thrilled with.”

Network Distributing Ltd, on its website

“We’ve found out some more information about the post-riot proceedings that will affect us and other similar sized DVD operations so here is a bit of an explanation of what (we think) will be happening in the immediate future.

“First off, we found out that all of our stock was insured which of course is great, but doesn’t come close to solving the problem of continuing again as normal. While all of our stock was insured it was only around 19,000 units which were damaged, but minimum orders on all DVDs and Blu-rays are 1,000 units each. This means that if we wanted to make our whole catalogue available again we would need to replicate 32,000 units. We will receive credit for 19,000 units of replication (though yet unsure as to how such costs of things like expensive blu-ray original glass master costs will come into play) yet cannot afford to cover the costs of the other 13,000 for now. This would essentially mean that for now at least we will have many titles that we won’t be able to manufacture for a while, if we even could…

“The second part of this replication problem is that with Sony’s main replication centre burnt down they have to do all their replication in a smaller centre in another location in the UK. This centre is now just for the big Q4 campaigns and is filled with the major releases for the final quarter of the year, but there are only so many units that can be replicated an hour by the machines there and there will be quite a pecking order in terms of what titles will be replicated first and by whom. As you can guess we, and other similar sized companies, are towards the very bottom of that ladder. This essentially means that despite the credit we have on hand to replicate our titles, there is not the time or space for this even to be done, so only a few of our titles (such as Confessions, Love Exposure and maybe one or two more) will get a chance to be replicated for now.

“This leaves us with quite a problem in that as a business we depend on certain cash-flow to get us through. For example with Villain, out in cinemas next week, we had planned a certain amount of advertising spend which would have been covered by upcoming dvd sales for the months ahead, which now will be gone. We will push ahead getting our bigger titles back on the shelves, but have no idea the timeframe on some of our catalogue titles. We will essentially be heavily downgraded so our company will not be able to invest in picking up or handling larger titles for a while.

“We have some of our titles available to view on Mubi with Confessions and Cold Fish going up very soon and hopefully some other titles following. We are also looking to expand onto other vod platforms such as iTunes and Blinkbox, but there is a cost to encode and get this titles onto the platforms and while we were planning on doing this soon anyways, we are now reluctant because of the initial startup costs. There’s also the problem in that many Japanese companies won’t give internet rights to films so many of our titles like Kamikaze Girls, Memories of Matsuko, Love Expsure and others won’t be able to be put online. We’ll do what we can anyways…

“For now, all we can ask is for people to try and support us by spreading the word out about our next release of Villain (Akunin) which is in UK cinemas August 19, plus tell friends about our label and get people to buy our stock through our Amazon store and other online and High Street retailers at so that we can get numbers looking good for pushing our label up the Sony replication ladder.

“We will try our hardest to ride this out and hopefully it won’t be as bad as we’re initially forecasting.”

Third Window Films, on its Facebook pages

“HMV can confirm that its stores in Wood Green (Shopping City) and Enfield (Church Street) were among the local businesses affected by the incidents that took place in North London over the weekend. The stores were both closed at the time and no members of staff were harmed.

“HMV has now secured both sites and is currently assessing the full extent of the damage to fixtures and fittings as well as the level of stock loss, which appears to be extensive.  While its on-site teams are working hard to normalise matters as quickly as possible, it is likely that it will take a number of days before the stores are in a position to re-open.  In the meantime HMV trusts that customers will understand, and apologises for the inconvenience this may cause.”

HMV spokesman Gennaro Castaldo

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