New Rental Approach Shakes Up Video Industry Retailers

PPV and PPT. Those initials don’t mean much to the general public yet, but they strike fear in the hearts of many home video retailers.

PPV and PPT caused a stir at the seventh annual Video Software Dealers’ Assn. Convention, a five-day extravaganza here that ended Thursday.

The biggest event of the year in the home video industry, this gathering of more than 10,000 of the nation’s retailers at the Las Vegas Convention Center is centered around software suppliers unveiling fall releases.

It’s also a chance for people in the industry to raise and discuss issues--such as PPV and PPT.

PPT, probably the most talked-about topic at the convention, stands for pay-per-transaction. It’s a method of revenue sharing between retailers and video companies, similar to the way distributors and theaters split the box-office income on movies. PPT is an alternative to the older system of doing business, in which video companies sell releases to retailers, who keep all the rental profits.

For the consumer, pay-per-transaction means that many more copies of hit movies will be available at their local video store, since the dealer only has to “rent” the copies himself from the distributor. But many retailers are balking at the prospect of video companies getting involved in their finances.

PPV means pay-per-view; it’s a cable-TV service that charges home viewers only for the movies they actually watch on a pay-TV service, rather than a flat monthly fee that applies even if they watch nothing. Home video retailers fear it because, in areas where it’s available, consumers often resort to pay-per-view instead of renting videos, since they don’t have to leave home and don’t have to worry about whether the movie they want is out of stock. Statistics show that rentals are down from 44% to 62% in areas where pay-per-view is available.

An anti-copying breakthrough announced at the convention may hurt pay-per-view. Macrovision, a company that developed an anti-copying technology for videocassettes, has come up with a similar system for pay-per-view that will be available to cable operators this fall.

The big question: Why would a cable company whose selling point is home taping want to spoil its pay-per-view business by installing Macrovision?

Once a bastion of small independent companies, the home video industry is turning into a playground for the big kids.

Conventioneers were buzzing about the fate of two prominent indies, Lorimar and Nelson Entertainment. Hailed just a couple of years ago as the leader in original programming, Lorimar, famed for the Jane Fonda exercise tapes, has been swallowed up by Warner Video. There’ll no longer be a Lorimar video label. Nelson Entertainment, now a shadow of its former self, has been largely absorbed by Orion Video.

But the major deals announced weren’t all involving consolidation. In another development, Cannon Entertainment announced the launching of a video division, Cannon Video, to be distributed by Warner Video.

Many retailers came away from the convention convinced that laserdiscs are the wave of the future. Many previously unfamiliar with the discs were wowed by the demonstrations at the exhibits. In picture quality, the laserdisc is far superior to normal VHS videocassette.

So far, laserdiscs have been limited to the high-end market. One problem is that the disc players are expensive and only capable of playback. Lee Kasper, vice president of sales and marketing for Image Entertainment, the major software supplier for the fledgling industry, predicted, “Once the price of the players drops and the recording technology is available, laserdiscs will be big competition for videotape.”

RCA/Columbia’s exhibit was dominated by “Willow” advertising. That was a puzzler since a release date hasn’t been announced yet. Apparently the company wanted retailers to start thinking about ordering copies of this George Lucas-produced fantasy. But since “Willow” is still playing in some theaters, RCA/Columbia didn’t want to announce its availability on home video while it still has theatrical life.

Commercials and commercial-tie-ins, once taboo in home video, are now rampant. At the convention, it seemed as if every video company was making an announcement of some deal with an advertiser--including a Coca-Cola tie-in with some of Disney’s Christmas releases and a link between Nelson’s “The Last Emperor” and Tsingtao Beer and Chun King frozen foods.