The Mouse That Soars : Disney Classics Fuel a Boom in Home-Video Sales

Heading into the gift-giving holiday season, in a year when the sale of pre-recorded videocassettes is on a record-setting pace, the lion’s share of home-video revenues belong to a mouse.

Buena Vista Home Video, the video distribution arm of the family-oriented Walt Disney Co., controls what is widely considered to be the industry’s most steady and reliable product stream. And, as important, Buena Vista has acquired the marketing muscle to keep it moving.

Despite some doubts in the industry that they will all sell, Buena Vista has already shipped an estimated 17 million videocassette copies of Walt Disney’s animated hit “Beauty and the Beast” to retail stores across the country, shattering the previous sales mark of 14.2 million units set last year by its own “Fantasia.” “Beauty” goes on sale Friday for $24.99.

Thanks to the power of “Beauty” and a library of other evergreen animated films released on video at a low price this year--”101 Dalmatians” (1961), “The Rescuers” (1977) and “The Great Mouse Detective” (1986)--Disney will emerge as 1992’s heavyweight market leader for the third year straight while becoming the first studio to top $1 billion in total video revenue, according to the media research firm Paul Kagan Associates.

That’s five times more than Buena Vista made in 1987 and accounts for 20% or more of the revenue earned by all home-video suppliers this year. That also makes Buena Vista the biggest filmed entertainment division in the world, generating more money than any major studio does theatrically, including Disney.

“Their dominance of the market is because of their animated product, period,” said a video marketing executive at a competing studio. “It’s strictly those animated classics driving up their revenue. When people look for generic, animated, family entertainment, they automatically go to Disney. It’s harder for us to get our animated productions in place in stores because of Disney.”

Buena Vista also received a lift from the unexpected theatrical success of “Sister Act,” starring Whoopi Goldberg. The summer sleeper, arriving on video Nov. 13, is expected to be among this year’s top “sell-through” titles--movies that are priced affordably for consumers at the time of their initial video release.

In addition, Buena Vista’s coffers have been lined by a flurry of home-video acquisitions aimed at children and families. Buena Vista most recently purchased worldwide home-video rights to the expansive Jim Henson library of movies and TV programs. In January, the new Jim Henson Home Video line launches with eight titles, including compilations of the TV series “The Muppet Show” and “Muppet Babies.”

“We’re interested in the family business,” explained Bill Mechanic, president of international theatrical distribution and worldwide video for the Walt Disney Co. “The payoff is bigger. We’re essentially a brand marketing company. We think that a lot of our growth will come not only from what we do with our own product, but what we can do for other product lines.”

Video lines for “Rocky and Bullwinkle,” “Alvin and the Chipmunks” and “The Ed Sullivan Show” have already moved through the Buena Vista marketing and distribution pipeline. And there are reports that the company has been pursuing worldwide home-video rights for Nickelodeon, the children’s cable channel.

But the real bedrock of Buena Vista is classic Disney animation, a form of entertainment that children watch on video over and over.

Earlier this year, “Beauty and the Beast” became the first animated feature to be nominated for a best picture Academy Award, as well as the highest-grossing animated film ever with more than $140 million in domestic box-office revenue.

Last holiday season, “Home Alone” raised eyebrows in the home-video industry with a record $25-million marketing campaign, including money from sponsors for promotional tie-ins. Now, Advertising Age places the total record-setting holiday promotion for “Beauty and the Beast” at $65 million.

“It’s a case of the right company, the right technology and the right time in history, if you want to look at it that way,” said Tom Adams, media analyst for Kagan. “The baby boomers are having their kids. They all grew up on Disney classics. Disney has restarted and stepped up the production of new classics in a big way. And the VCR is making it possible for people to take these movies home and enjoy them.”

Every seven years or so, Disney re-releases its vintage animated movies in theaters to a new generation of children, and Buena Vista has followed suit. Since the mid-1980s, such titles as “Cinderella,” “Bambi” and “The Jungle Book” have been carefully released on video for a limited time following their theatrical run.

When chairman Michael Eisner established a new regime at Disney in 1985, one of his goals was to restore the polish to Disney’s lackluster animation department--the historical backbone of the studio. In 1989, “The Little Mermaid” was hailed by Disney as an “instant classic,” the studio’s first real one in two decades, grossing $84 million at the box office and moving almost 10 million videocassettes.

Suddenly, Disney found itself with both old and new animation to package for video sales and rental--an $11-billion industry in 1992, more than twice what consumers spent on movie tickets--and Buena Vista blossomed.

Disney has since increased the rate of animation production to one feature film a year, and plans to produce another one every other year by 1996 through its Florida animation studio. Nov. 11 marks the opening of Disney’s next animated film, the musical “Aladdin,” starring Robin Williams as the voice of the genie. “Aladdin” is already being pegged as a sure-fire sell-through video title for next holiday season.

“They’re the only studio that has a consistent flow of product,” said Ron Castell, senior vice president of programming and communications for Blockbuster Entertainment Corp., which operates 2,989 video retail stores worldwide. “They’re the only studio with a brand name.”

Disney has also been the most successful studio to exploit the sell-through market. Studios can either release new films as rental titles at an average cost of $62 per tape to video retailers, or, if they feel there is a strong consumer appetite to own the movie, they can release them as sell-through titles at a cost of $17 to retailers.

The catch: At that low sell-through price, the studio has to move a tonnage of product to show big profits. By controlling more than half of the industry’s sell-through business this year, Buena Vista’s massive sales force has become skillful in persuading mass merchants, which purchase the majority of all sell-through units, to buy Disney in bulk.

“They caught on very, very quickly, relative to the other studios, about the sell-through business,” said Seth Goldstein, home-video editor for Billboard. “They decided early on to exploit it. They’ve done a better job than the rest of Hollywood combined, probably, in reaching mass merchants and selling directly to major accounts.”

Castell suggested that Buena Vista understood retail marketing concepts better than the other studios from the start because the studio has been licensing and marketing Disney characters in retail stores for years.

“Disney had a tremendous base of knowledge to use as a springboard into video,” Castell said. “They squeeze every ounce out of a product.”

Critics are skeptical that all 17 million copies of “Beauty” will sell. That’s the case currently with “Wayne’s World.” Paramount Home Video overestimated consumer demand, shipped 5.4 million units and distributors are now stuck with too many copies.

Sources say that only once--in the case of “Honey, I Shrunk the Kids”--did Disney misjudge its market and overdeliver product. But the studio also learns. The sequel, “Honey, I Blew Up the Kids,” comes out on video in January--but as a rental title, not a sell-through title.

“In the beginning, we had trouble being treated as a niche: ‘You can’t sell these things. They’re kids’ films. They’re small pictures. They’re specialized,’ ” said Mechanic at Disney. “I think we’ve been successful because we didn’t listen to anybody. There’s more competition today, even within the realm of animation, than there’s ever been. The fact is, it’s very hard for anyone else to build up the credibility and good will that we’ve been able to do over the years with the public.”