Hong Kong video distributors are pushing for a rental rights fee of 50% of the wholesale price of a disc, a move that local rental shops are claimingwill put them out of business.

The Hong Kong Video Development Fund, representing 11 distributors, wants to increase the rental rights fee following lapse of a one-year agreement that set the fee at only 30%.

However, the Rental Industry Alliance (RIA) is claiming that up to two thirds of Hong Kong’s 300-odd video rental shops will be forced to close within the year if the increased fee is enforced. The alliance represents 70% of Hong Kong ‘s rental shops.

RIA spokesperson Freeman Yeung Cheung-ching told local paper the South China Morning Post that 90% of local rental shops are already operating at a loss. Some shops have tried to increase charges to the consumer over the past year, but had to drop prices due to fierce competition.

“It’s unbelievable for the distributors to increase the copyright fee under such economic conditions,” Yeung said. “Any adjustments in the copyright fee should be calculated in accordance with actual figures that reflect the state of the market.”

Global video rental giant Blockbuster pulled out of the Hong Kong market in 2004 due to tough operating conditions including high rents, rampant piracy and the lack of a clearly defined rental window.

The RIA is meeting with distributors today (April 28) along with officials from the Hong Kong government’s Commerce and Economic Development Department to dicuss the matter.