Video Rental Prices Are Expected to Rise

Home-video renters, brace yourselves.

Paramount, the industry trend setter in pricing, just announced that “The Hunt for Red October” will be released on Oct. 25 at a wholesale price of $63, a $5 hike that translates to a $99.95 retail price.

Alan Perper, Paramount’s vice president of marketing, said that, for now, only the “October” price is being raised. Still, other video companies are expected to follow Paramount’s lead in the next few months, stretching retailers’ budgets to the point where many will have to pass on the cost to consumers by boosting rental prices.

The last major wholesale price rise for rental cassettes, from $56 to $58, was instigated early last year, with Paramount, as usual, leading the way.

Perper explained that dramatically rising costs have made the wholesale price hike necessary--particularly now that expensive TV advertising has become such an essential part of marketing rental titles.

“Raising rental prices is one way retailers can deal with this wholesale increase,” he said. “We expect many retailers to be unhappy about all this.”

“This isn’t good news,” said Ron Castell, senior vice president of Blockbuster Video. “Raising rental prices is the one thing retailers hate to do because it alienates customers. Blockbuster has no plans to do anything now, but other retailers undoubtedly will raise rental prices.”

B-MOVIE REMEDY: One of the biggest problems in the home-video business is that fewer and fewer B-movies (mostly low-budget films that have had little or no theatrical release) are available at video stores. That means less variety for the average customer and dissatisfaction for B-movie aficionados.

Retailers complain that these movies carry an unreasonably high wholesale price and rent so slowly that each cassette may take months to pay for itself. On the other hand, the video companies contend that their expenses for B-movies--such as acquisition cost and advertising--are so high that they can’t afford to lower the wholesale price.

Paramount has come up with a plan that may help retailers. In September, the company is releasing four B-movies that can be purchased on a four-month installment plan.

“The problem as we see it isn’t that the wholesale price is too high,” Paramount’s Perper said. “But it takes too long for retailers to get a return on their investment because B-movies don’t rent as quickly a major movies. Normally, retailers have to pay that wholesale price right away. But spreading it over a few months may make them more willing to buy B-movies.”

This may be a case of too little, too late. Music Plus executive Mitch Perliss said recently that the solutions that the video companies have developed to combat the B-movie problem apply only to a few movies--not enough to make a big difference.

COPYCATS: How extensive is copying of prerecorded videos?

Nobody knew for sure, so Macrovision, the company that provides the only copy-protection system used in the home-video business, commissioned a research firm, SRBI, to find out.

Some of the results, according to Macrovision’s vice president of sales and marketing, Bill Krepick:

* The industry loses $500 million each year because of copying.

* Forty-one percent of VCR owners own at least one illegally copied tape.

* More than 3 million households have two VCRs permanently linked together for the purpose of copying tapes.

Countering the popular notion that only high-priced major movies are copied, the figures show that 70% of the copied cassettes could be purchased for less than $30.

Macrovision is effective, the study shows. Of consumers who’ve tried to copy cassettes, 60% reported problems attributable to Macrovision, a system that encodes the videotape in such a way that the picture and sound quality are disrupted if someone tries to copy it. But 60% of the tapes released last year did not have Macrovision protection.