Strong 2nd half paves way for 1992 home video sales

Discount Store News, Feb 3, 1992 by Frank M. Viollis

Even while waiting for the black ink to dry on 1991's fourth quarter results, suppliers and retailers of preceorded home videos were smiling.

And why not? At a time when most Americans shopped with more caution than they had in over a decade, video sell-through sales exhibited a vitality out of keeping with the consumer environment. It was almost as if the slumping economy had fueled consumer interest in prerecorded videos.

Research conducted by Fairfield Research, Lincoln, Neb., showed that 494.24 million prerecorded videocassettes were sold at the sell-through level in 1991. That's more than a 450% increase from four years ago, when in 1987 sell-through sales were generated by the movement of only 98.2 million units.

Driving factors behind this 1991 success story include:

* The consistent lowering of sell-through prices to points below the $20 threshold;

* The availability of an increasing number of titles from studio libraries and catalogs;

* A more conscious effort by suppliers to package and promote the product to appeal to the growing American passion for collecting video libraries.

The banner holiday sales season capped what started out as a rather slow year for prerecorded video.

"1991 started with a shortage of major hit releases into the sell-through market," said Louis Kircos, senior vp, finance, for The Handleman Co., the large rack jobber based in Troy, Mich. "Perhaps it was because of Operation Desert Storm, I don't know. But it wasn't until the summer, and Disney's release of [the animated version of] 'Robin Hood,' and later 'The Jungle Book,' that things started to pick up."

It's not surprising that Disney should be recognized as leading the way in creating the positive video sales environment that swept late 1991. It was, after all, Disney's acknowledged marketing strategy (see DSN, Feb. 18, 1991) to expand video sales beyond the "traditional" Christmas window to an annual basis. Apparently, they succeeded.

Disney, which stands at the center of a video universe almost completely of its own design, spent an estimated $75 million on promoting video titles during the last quarter of the year alone. It was, like most of Disney's investments, money well spent. It is estimated that Disney's annual revenue was about $920 million.

As 1991 drew to a close, Disney features, led by "Fantasia" (which sold more than 13 million copies between its release Nov. 1, and Dec. 31, 1991--equaling an estimated $160 million in revenue), accounted for four of the season's top 10 videos. Warner Home Video's "Robin Hood: Prince of Thieves," and Fox Video's "Home Alone," were second and third, respectively.

"We had a fabulous year," declared Dennis Maguire, vice president of sales, Disney Home Videos. "For one thing, "Fantasia" will be the biggest title ever released on home video. For another, many of the acquisitions we developed in '91 [specifically, the product line accessed through Disney's negotiations with Jim. Henson Home Video], will bring whole new opportunities to our customers. "We can promise our retailers," he added, "a steady and profitable flow of quality product throughout 1992 and beyond."

That flow will begin in a few weeks with the offering of the recently re-released animated feature, "101 Dalmations" and will be followed by a steady procession of major feature releases, neatly dovetailed by Disney "classics."

Being able to dip into a vast catalog of well-established titles is not a Disney exclusive. MGM/UA can boast of a "classic" library second to none. It controls worldwide home video distribution rights to the Turner/MGM Library of 2,950 titles, and the United Artists Library of more that 1,000 motion pictures.

Republic Pictures Home Video has a catalog of over 1,400 titles and reads like an encyclopedia of Hollywood.

"We're sold on Paramount's 'Great Movies/Great Price' promotion," explained Arrow Distributing Co.'s vide president of merchandising, Ken Corum.

"Sure we provided our clients with the big three blockblusters near year-end ["Home Alone," "Robin Hood" and "Fantasia"]; but, for consistent profitability we went with Paramount for 1991, and will more than likely continue to do so for 1992 as well."

Corum added that Paramount offers a quality product at a sell-through price point [$14.95] that's very attractive for consumers. Of Paramount Communication's 800 videos for sale, 200 are now listed at $14.95 each--twice as many as in 1990. Brand awareness is high with Paramount titles. And, as a studio, "they're committed to constantly freshening the product mix with the kind of new titles that appeal to our customer base, such as the 1990 blockbuster 'Ghost' which retailed for $14.95. Finally, their promotions are well thought out and profitable," said Corum.

The idea of sales promotions is nothing new. Everyone does it. But in 1991 the strategy of packaging and promoting video series and titles by genre became a merchandisers reality. How better to capitalize existing film libraries, and generate year around interest?