Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, September 4, 1994 TAG: 9410190014
SECTION: BUSINESS PAGE: F1 EDITION: METRO
SOURCE: MIKE MAYO CORRESPONDENT
DATELINE: LENGTH: Long
The first video stores were exclusively rental operations. The surprise success of lower-priced cassettes - led by Jane Fonda's workouts - showed everyone in the industry there's big business in selling tapes as well.
What the video industry calls sell-through tapes, those generally retailing for $5 to $50 each, of feature films and other productions are proving extremely profitable. Now the industry is moving in some unexpected directions.
According to Alexander & Associates, 277.1 million videotapes were sold in the first half of 1994. That's a 35 percent increase from the same months of 1993, and more than double the sales volume in the first half of 1991, said Amy Innerfield of the New York research firm.
At the same time, rentals have risen about 5 percent, from 2.24 billion in the first half of 1993 to 2.35 billion in the first six months of this year.
Even more telling are dollar volumes. Assuming an average retail price of $14.73 per tape, Alexander & Associates estimated the value of video sales at $4.08 billion in the first half of this year. That's pushing close to the value of the rental market in the same period of $5.75 billion, assuming an average rental price of $2.45 per tape.
With Walt Disney's "Snow White and the Seven Dwarfs," "Jurassic Park," "The Flintstones" (and possibly the the summer's sleeper hit "Speed") scheduled for sell-through release before Christmas, more records will fall this year.
Most of the tapes that sell well are children's films. There's no surprise in that; kids are the ultimate repeat viewers. For what many families might spend to rent a tape several times, they could own a favorite, such as ``Aladdin,'' for $20.
"The Disney movies are really popular," said Jennifer Kenney, manager of the King Video store in Roanoke. Although sales account for only about 5 percent of her business, they are more popular at King Video's store in Christiansburg.
At her store, Kenney said, sales are divided between new low-priced tapes and used tapes that have been retired from the rental racks.
Overall, "sales have definitely grown over the past year. Some customers make reservations to buy their favorite titles as soon as they leave the rental section," she said.
But sell-through works in other areas, too, and changes in technology are about to bring the videotape into new aspects of sales and advertising. Subject matter for tapes that range in cost from giveaway to $50 include the video version of retailers' catalogues to political advertising to sex.
Playboy Enterprises, for example, has been successful with sell-through tapes. In any given week, one or two of the Chicago-based magazine publisher's $20-titles are listed on Billboard's Top 10 sales, right up there with the Disney cartoons and PG-rated Hollywood comedies.
Barry Leshtz, vice president and general manager of Playboy home video, said that sell-through success has come slowly. ``What we've finally managed to do is get our retail penetration up to the level of our consumer perception.
"It may have taken us a long time to break into the traditional video market to the degree that we've wanted to. There's always been a bit of hesitancy for a retailer, especially in middle America to merchandize our product, to bring it to the front of the store and advertise it," he said. "We've now crossed over.''
Playboy tapes are a reflection of the magazine. Photos on the box cover are low-keyed. In terms of content, they range from collections of vignettes to the recently popular ``celebrity centerfolds'' featuring the likes of LaToya Jackson and Patti Davis. Overall, the approach is romantic. These tapes tend to look like beer commercials or middle-of-the-road music videos but with lots of nudity and mild sexual content. There's no violence.
As Leshtz puts it, ``Playboy has always been mainstream. We're really a very conservative company, though that may sound contradictory. We're now in Blockbuster and Tower records and department stores. We've had a wonderful relationship with Sharper Image for the past four or five years.''
The people at Technicolor Video Services in Burbank, Calif. have come up with a new spin on videos to compete with catalogues in the direct-mail business. To that end, they have developed the Delta Cassette, a lightweight virtually disposable tape, and the Laminar Cassette, which bonds the conventional cardboard sleeve to the plastic cassette box.
They've also put together a system by which a company or a political candidate can put a ``personalized'' audio message on a videotape in much the same way that many direct-mail merchants can "personalize" their messages.
By combining Technicolor's existing tape duplication operation with these new lightweight tapes and computer mailing lists, vice president Gary Hunt claims to be able to produce, copy, package and mail cassettes for less than $2 a unit. Now they can handle 5,000 tapes a day and expect to increase that number quickly.
At the high end of the sell-through spectrum are more specialized tapes like Robert Weatherwax's ``The Lassie Dog Training System.'' Priced at $50, it's aimed at a small market niche. This is not something for the casual dog owner. The Weatherwax family for years has been training animals to star in movies. Rudd Weatherwax, Robert's father, trained the first Lassie in 1943. Robert and the current canine star made the most recent "Lassie" earlier this year in Tazewell County.
``The Lassie Dog Training System'' is a two-tape, three-book package. Weatherwax has chosen to market it privately by phone (800-591-7200), bypassing conventional video stores.
In the coming years, the balance between rentals and sales is expected to become more even, and retailers' inventory will reflect that. There should be more low-priced tapes in more places: department stores, drug stores, fast-food restaurants.
The rental side isn't likely to disappear. Visits to the local video store are an established part of many people's routine, some consider it a social experience as well. And except for collectors, many consumer probably wouldn't consider many Hollywood films aren't worth $20, although they'd pay $2 to $3 for an evening's diversion.
by CNB