Children’s Video Market Comes Into Focus : Kidvid: Prices are lower, there are more outlets and the programs are more sophisticated, but some psychologists say videos are merely electronic baby-sitters.

Tis the season for kidvid. When millions of children open their presents Christmas morning, they will find copies of such videos as Disney’s “Cartoon Classics” and “Singalong Songs,” and Hi Tops Video’s “Baby Songs,” “Lyle, Lyle Crocodile” and “Madeline.”

The last three months of the year are the most important in the children’s video market.

“Though all the companies do better this quarter because of the gift buying, that doesn’t mean the market is slow the rest of the year,” said Nancy Steingard, Hi Tops Video’s vice president of acquisition and programming. “The market has matured to the point where it does good business year-around.”

Indeed, the children’s video market has changed in the last five years: Sales rather than rentals are now dominant, prices are lower, there are more outlets, the programs are more sophisticated.

Loretta MacAlpine, the children’s video writer for the trade magazine Video Insider, defines children’s video roughly as programs designed for kiddies between the ages of 3 and 7.

According to industry analyst Leslie Grey of the trade journal Home Video Publisher, children’s video has been growing steadily each year since the mid-’80s and accounted for $750 million, or 25%, of the sales market last year.

Volume is certainly up. Last year, Grey reported, the top 78 children’s video titles--about 90% of the market--accounted for shipments of more than 20 million units. Overall this year, she said, about 40 million units have been shipped.

One reason volume is up is that prices are down. Hi Tops’ Steingard noted that most children’s videos, which run about half an hour, sell for $10 to $15, before discount. Five years ago, when rentals dominated kidvid, the price ranged from $30 to $60.

One big difference in the market in the last few years has been the shift of focus from rental to sales. In the early days of video, children’s titles were high-priced and geared to the rental market.

“Renting children’s video is difficult on parents,” Steingard said. “Kids like to watch these programs over and over. If parents go along with their children’s wishes, they would spend a fortune in rentals. It’s cheaper to buy the title.”

In the last two years, the influx of mass merchants such as Target has been a boon to the home-video sales market in general and children’s cassettes in particular.

“Now only 35-40% of our business is done through video stores,” said Ann Daly, vice president of marketing for Buena Vista, which includes Disney. “The rest goes to mass merchants and supermarkets.”

Hi Tops’ Steingard estimated that as much as 70% of her company’s business is done through mass merchants.

To give an example of the expansion of the market and increased availability of titles, Daly said that three or four years ago there were about 50,000 outlets for kidvid. Now, she said, the total is more than 100,000.

But all isn’t roses in the kidvid business. Some child psychologists contend kids watch too many videos, which, the detractors charge, are basically electronic baby-sitters. Parents say the market has become so flooded with titles that it’s hard to distinguish between what’s good and what’s not.

Also, parents continue to grumble about the quality of children’s videos, claiming they’re too frivolous and insubstantial. Video company executives, of course, insist the product is much better than it was a few years ago. Upgrading quality is expensive, they note: A half-hour program can cost from $150,000 to $400,000.

But paying for more and better original programming becomes increasingly difficult. With the prices dropping to accommodate the discount sales outlets, the profit margin is dropping too. “It’s become a high-volume, low-profit business,” said Home Video Publisher’s Grey.

One way to generate more revenue is sponsorship deals, in which advertisers help pay for the cost of original programs. Commercial tie-ins are now commonplace. By hooking up with cereal companies and fast-food chains, video companies can get added exposure in various markets for certain titles and thereby sell more cassettes.

“We’re trying to turn out quality programs while making a decent profit at the same time. The way the business is now, that gets tougher and tougher,” Steingard said.