Dealers Meet Amid Shakeout


Gloom and doom.

That's the prevailing mood among many video retailers who'll be attending the industry's premiere software showcase, the ninth annual Video Software Dealers Assn. convention, Sunday through Wednesday, at the Las Vegas Convention Center. Basically, at this event, in an often circus-like atmosphere, manufacturers showcase home-video software for retailers who're stocking up for the fall.

Through most of the '80s, when the video business was booming and giddy over double-digit growth, these conventions were largely self-congratulatory celebrations. This is first year that so many retailers--and many small manufacturers--will go to the convention worried about survival.

The retailers' big concern is the impending rise in the wholesale price of rental tapes this fall and its many negative repercussions--which include higher rental prices.

"This is the issue that will be on the minds of most of the people at the convention," predicted VSDA's executive vice president Pam Horovitz.

Said Ed Weiss, general manager of Movies Unlimited, a five-store chain in the Philadelphia area: "A lot of people will be talking about the wholesale price rise because, for some of these retailers and small manufacturers, it's the beginning of the end. They way the marketplace has changed in the past year or two, they can't survive."

But none of this is expected to hurt attendance. VSDA publicist Dana Kornbluth said 15,000 attendees are expected for the convention, a rise of 500 over last year. Also, she said there are 425 exhibitors--10 more than last year.

Paramount triggered this gloomy mood with the recent announcement that, when "The Hunt for Red October" comes out Oct. 25, the wholesale price--what Paramount charges retailers and distributors--will be $63, a six-dollar hike over the current standard.

The expectation is that other home video companies will also raise prices in the next few months--drastically shrinking the retailers' profit margin.

This wholesale price increase is part of the chain reaction to the first major rental slowdown (which began last year) that the industry has ever experienced. "Companies like Paramount aren't selling as many rental tapes as they used to, so they raise prices," Weiss explained.

VSDA's Horovitz pointed out another issue that will get plenty of attention at the convention is the consolidation that's under way in the industry at various levels. "The industry is maturing," she said. "It's very healthy but the growth isn't what it used to be. What's happening is that, at the manufacturers level, some of the smaller companies aren't surviving. The bigger companies are taking over smaller companies. Other smaller companies are folding because they can't compete in this atmosphere."

One possible result of this climate: Retailers may be ordering very cautiously for the fall season. Also, this convention may not prove too lucrative for companies marketing esoteric, non-theatrical movies.

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