Video Software Dealers Ponder Uncertain Future
The big difference at the eighth annual Video Software Dealers Assn. convention here this week was the absence of euphoria about industry growth.
Though the four-day convention that ended Wednesday was a success--there were more than 14,500 registrants, an increase of about 1,000 over last year--visitors could sense underlying jitters about where the industry goes from here.
Double-digit growth, celebrated at previous conventions, is a thing of the past.
“The industry is leveling off,” said convention chairman Andy Lasky. “That incredible growth we experienced in the mid-’80s couldn’t go on forever. VCR sales and VCR penetration (the percentage of households with VCRs) are slowing down. They’re still growing but at a much slower rate. Many retailers aren’t sure what that means.”
For many of the owners of the nation’s 27,000-plus video stores, it’s bad news. Some will be forced out of business as the market becomes more competitive. The long-predicted shakeout--the closing of small stores that lack the resources to compete--is under way.
“The shakeout is very slow--not as dramatic as people expected,” Lasky said. “But it’s certainly happening. There are fewer stores in the U.S. now than there were a year ago. Next year there will be fewer than there are now. There’s no cause for panic. Video retailers just have to get used to this new atmosphere. When the industry was growing by leaps and bounds, everything looked rosy. Business isn’t great for some people. Things don’t look quite as rosy as they did a few years ago.”
ISSUES: The inevitable leveling of home-video growth might be a boon to the emerging laser videodisc market. These discs, which look like big CDs, offer a picture twice as sharp as what’s on videocassette. A small number of video stores carry them now, and Martin Greenwald, president of Image Entertainment--the major laserdisc distributing company--was at the convention trying to persuade more retailers to do so.
“With the videocassette business flattening out, retailers are looking for other ways to bring in customers,” Greenwald said. “Laserdisc is the wave of the future. It’s something that might really start growing now that the videocasette business is slowing down and the emphasis shifts away from that.”
There was considerable talk among the retailers, meanwhile, about the inroads made by mass merchants such as Target and K mart in the home-video sales market. When it comes to sales, video retailers talk a good game, but most still prefer to concentrate on rentals.
Certain video companies, though, regard the increasing interest of mass-merchant outlets as a blessing.
“It’s been a boon to our company,” said Glen Ross, marketing vice president at Republic Home Video, whose business is mostly selling old Republic movies at $20 each. “Most of our movies now go through the mass merchants--about 60%-70% of our business. It’s been tough to convince video retailers to carry our product.”
Consumers have benefited too, said George Krieger, president of CBS-Fox: “The pressure from the mass merchants is helping to drive prices down. That’s, of course, great for consumers. Prices have to be low before the mass merchants will stock the product. The mass merchants are the big new market. Companies are doing what they can to get in on it--which means dropping prices.”
NEW MOVIE ANNOUNCEMENTS: At its Wednesday luncheon, Warner Video did not--to the disappointment of the retailers--announce the fall release of “Batman,” which probably means that’s a dead issue for a while.
So the coming holiday season shapes up, as Paramount says, as a “Murray Christmas.” Bill Murray will be starring in the two big Christmas rentals. RCA/Columbia announced that “Ghostbusters II” will probably be a Thanksgiving release, and Paramount is putting out “Scrooged” on Nov. 9. “Scrooged,” a comedy version of “A Christmas Carol,” grossed more than $60 million in theaters at the end of last year.
The other major announcement was HBO’s October release of “Scandal”--about the notorious early ‘60s British sex scandal--in two versions, R-rated and unrated. HBO marketing manager Peter Ligouri said the steamier unrated version would include about eight minutes of footage that was edited out of the R version.
“Some stores are very family-oriented and won’t take unrated movies,” he said. “We’ll ship them the R version. The others will get the unrated version.”
