VALENTI URGES LINK WITH VIDEO FORCES

Just a few years ago, Jack Valenti, who represents the interests of the American movie industry, was the bitter enemy of the nation’s opportunistic video store owners.

Valenti, erstwhile political aide to Lyndon Johnson, lobbied Congress for legislation against the renting of video movies on the grounds that it was an infringement of copyright. Had he won, video retailers would be in the sales rather than the rental business, and there wouldn’t be a video store in every mini-mall in America.

But Valenti lost that fight and this week, while virtually admitting that he had come to Las Vegas with his tail between his legs, he gave the keynote speech at the sixth annual convention of Video Software Dealers Assn.

Valenti, now in his 21st year as president of the Motion Picture Assn. of America, made continued reference to the previous differences between the two groups, but was now urging the software dealers to embrace the MPAA as a partner, “to consider your enterprise the ‘movie store’ for the neighborhood.

“We are allies for the simplest and grandest of reasons,” he said. “As your business grows, so does ours.”

He used a lot of statistics to tell the video retailers what they already knew--that they’re big business and getting bigger. Their total revenue for 1986 was nearly $5 billion, about twice what the movie industry took in from film rentals in theaters.

The nearly 4,000 video dealers attending Valenti’s speech seemed respectful and, at one point, when Valenti declared war on video pirates who duplicate movies and rent them, he got a huge ovation. But there remain great potential battles between the two interests competing for our movie-consuming dollars.

The biggest is pay-per-view, the imminent boom in satellite and cable broadcasting of first-run movies directly into homes at billable-per-viewing premiums. The film industry sees pay-per-view as an additional income market, between the theatrical and video release, while video dealers see it as the studios’ way of undercutting the video rental business.

Valenti did not mention pay-per-view in his speech. Instead, he called on the dealers to emphasize sales of video movies over rentals. He called “own your own” the new video frontier and cited Paramount’s “Top Gun” sales as an example of how both sides can benefit.

According to Valenti, video stores actually sold nearly two million “Top Gun” tapes. Valenti didn’t have to complete the equation for the math-wise dealers. If those tapes all sold for $26.95, that would have meant grosses of about $25 million each for Paramount and the dealers.

Valenti compared video stores to neighborhood bookstores. People don’t buy hardcover books, then throw them away, he said. Why should movies be any different?

The simple answer is that most video movies cost more than most hardcover books, lots more. The standard retail video movie price is $79.95, and it’s on its way up to $89.95. Paramount Home Video, which has successfully marketed several of its films at a $29.95 retail price, recently acknowledged that its future releases--starting with “The Untouchables” and “Beverly Hills Cop II”--would be at the $89.95 price.

HBO Video got everyone’s attention in Las Vegas by announcing that it was putting a suggested retail price of $99.95 on “Platoon,” virtually guaranteeing that the Oscar-winning war film will be a rental-only item at video stores.

For the moment, Hollywood and the video industry are not adversaries. Nor are they allies, as Valenti suggested. The film companies supply product to the retail video industry, just as they did to the fledgling television industry four decades ago, and they get good money from it.

But it irks them now, as it did then, to see their products create an industry that gets an even bigger share of the market than they do.

The video business has, in the six years since the Video Software Dealers Assn. held its first convention, become one of the most explosive success stories in the history of American industry.

Ten years ago, the VCR was virtually nonexistent. Five years ago, film industry analysts were assuring Hollywood that video rentals were no more than novelties. As recently as two years ago, speakers at the convention of movie theater exhibitors in this same Las Vegas routinely referred to VCRs as “next year’s dust collectors.”

Well, nearly 50% of all American homes have functioning, dusted VCRs now. There are more than 27,000 video stores--about 5,000 more stores than there are movie theaters. And the convention, which ended Wednesday, was attended by more than three times the number of people at last year’s convention of theater owners.

The doomsayers were wrong, as usual, when they predicted that video would destroy the theater business. Both are enjoying record revenue years. But there is a sense that video is getting more than its share.

In his keynote speech, the colorfully verbal Valenti told the story of a woman who once said to Winston Churchill, “You, sir, have consumed enough alcohol to fill half this room.” Churchill reportedly looked around and responded, “So much done, and so far yet to go.”

Valenti’s point was that the young video industry has as much success ahead of it as it has already achieved. But what he really seemed to be saying was that nobody should drink alone.