VIDEO BOOM CALLED NEW ‘GOLD RUSH’

Sales and rentals of videocassettes have mushroomed in a few short years to the extent where video stores are no longer hard-to-find specialty shops but are now integral to nearly every corner shopping center.

That fact hasn’t been lost on John Pough, recently elected president of the Video Software Dealers Assn., a group with a membership of 2,000 representing nearly 10,000 video stores throughout the country. Owner of two Video Cassettes Unlimited stores in Orange County, Pough’s Santa Ana shop is one of the county’s oldest video stores.

“We’ve gone from being the only game in town to seeing video movies not only in every record store, drugstore and mass merchandiser, but also in hardware stores and even down the street in one butcher shop,” Pough said in a recent interview at the Santa Ana store that he and his wife, Carol, opened in 1978.

Pough likens the retail video boom to “the Alaskan Gold Rush of the 1890s. It’s like people rushing into the Klondike.”

Illustrating how much the video industry has grown, both in revenue and respect, Pough said that only a few years ago he and other video store owners had to pay major film studios for the use of movie posters and other promotional materials.

“Not anymore,” he said with a chuckle. “Now they are giving us the posters and even supplying us with half-hour trailer tapes.”

Pough also said that 1986 might be the year that the retail video industry’s revenues for the first time tops the film industry’s box office receipts, which in 1985 hit about $4 billion.

“This year, our industry has done between $2 billion and $3 billion,” Pough said. “Next year, I wouldn’t be a bit surprised if it comes to $5 billion. The studios are realizing that we are a force to be reckoned with.”

But he bristled at the common suggestion that the video merchants want to eliminate movie theaters.

“I keep hearing this, that we are going to put people out of business. I don’t want the movies first, before they are shown in theaters. I want the studios to do their $7.5-million dollar advertising campaigns,” Pough said.

“The only theaters that are going to be put out of business are the bad ones. In my business, I go to the movies a lot, but I don’t want to go to a theater that has a poor sound system or where my feet stick to the floor.”

Pough’s vision of the video industry’s future isn’t all clear sailing, however. He predicts more storms ahead for retailers who carry sexually explicit videotapes.

X-rated movies launched the videocassette market nearly 10 years ago, and Pough said such films still represent a substantial portion of the video industry’s business--at Video Cassettes Unlimited, they account for about 20% of rentals and 5% of sales. But he added that G-, PG-, PG-13- and R-rated films from the major studios now dominate the home videocassette industry.

“X (rated) product has always been controversial, and the Supreme Court has ruled that a community has the right to determine its own guidelines (for regulating pornography),” Pough said. “But I see a lot of groups using (their objections to) X-rated product as a front, and what they really want to get rid of is R-rated product.”

Paul McGeady, general counsel for New York-based Morality in Media, said ratings are irrelevant to the pornography issue because the MPAA is not a legislative body and the group’s ratings have no legal foundation. Therefore, films are examined on an individual basis without regard to R or X rating. But McGeady said he is not aware of any censorship battles over R-rated films. “Most have carried the X rating,” he said.

One of Pough’s other big concerns is that the number of video retailers in Orange County--already one of the nation’s hottest video markets--will continue to multiply before eventually stabilizing.

This growth, which in 1985 brought the number of video stores in Orange County to 550, prompted Pough and his wife to open their second store in Stanton last August. But even though Orange County is one of the hottest video markets in the nation, Pough believes the county may have reached its saturation point.

“What usually happens is that one of our customers comes in on a Friday night and can’t get to the counter because of the lines, so he thinks: ‘I better get into this business.’ Then he mortgages the house and opens a video store.

“I don’t think that’s healthy,” he added. “We’re getting a lot of marginal video stores.”

How can consumers tell a good store from a bad one?

“The amount of inventory,” Pough said. “A lot of stores just look at the Billboard Top 50 and that’s all they carry. People should watch out for memberships. You don’t have to have a membership at the butcher shop to buy a pound of chopped meat, do you? Good retailers don’t need that.”