Filmland’s New Ploy: ‘Sell-Through’ : Videos: Stores are peddling more and renting less. The industry has responded by releasing many of the biggest movies for purchase by consumers and collectors.


Three years ago, space in the Tower Video store on Ventura Boulevard was overwhelmingly given to rental videos, with a smattering of titles for sale tucked around the checkout counters. Today, sell-through titles have consumed nearly two-thirds of the floor space, with rental videos relegated to the back of the store.

When the Virgin Megastore opened in December, 1992, on Sunset Boulevard, it dedicated a modest portion of its 32,000 square feet to video rental. Within a month, the rental area was converted into a space for laser-disc sales.

In addition to selling albums, Music Plus stores (and Sound Warehouse in the South) rented videos. But this March they were replaced by Blockbuster Music, where videotapes are sold, not rented.


The video rental market has flattened out, yet video sales have expanded exponentially. The industry has responded in kind, releasing many of the biggest movies in what’s called “sell-through.” Sell-through titles are priced from $10-$25, to be affordable for the average consumer; rental titles retail around $100, which generally means that the majority are sold to stores that rent videos.

“It used to be there were four to six major titles released on video as a sell-through per year,” says Andrew Kairey, senior vice president of sales and marketing, MCA/Universal Home Video. “Now, it’s four to six per quarter.”

Moreover, sales outlets have expanded as well. “It used to be even a mega-hit would only be available in 60,000-75,000 stores,” Kairey says. “That threshold was broken in 1994, with titles for sale in 100,000 locations.”

The thinking is that studios can earn more if consumers buy titles outright rather than renting.

Evidence of the new philosophy is the number of major titles coming out in sell-through around Christmas, unlike in years past. It begins with an unprecedented Dec. 23 release date for MCA/Universal’s direct-to-video “The Land Before Time 2.”

Though most would argue that releasing anything so close to Christmas would beg failure, Kairey explains: “It’ll provide fresh product for the first of the year, and there’s tremendous traffic for the retailer even through the second week of January. And Dec. 26 is traditionally one of the busiest retail days of the year. We also wanted to play off the high amount of exposure ‘The Land Before Time’ is now receiving (currently on sale at McDonald’s).”



Soon to follow in the sell-through market are such blockbusters as the Jim Carrey vehicle “The Mask” (Jan. 24), Disney’s animated hit “The Lion King” (March 3) and the box-office phenomenon “Forrest Gump” (April 28), as well as the kid films “The Little Rascals” and “Angels in the Outfield.”

In the case of releasing the remarkably popular “Forrest Gump” as a sell-through title, Marty Sikich, product manager of video and laser at the Virgin Megastore, says, “Some would argue that they’re leaving rental money on the table. If it initially sold for $100, every rental store would be paying $65-$70 per unit. For this to work, they’re gambling that they’re going to sell over 10 million units. And they probably will, but that’s the type of decision I’m happy I don’t have to make.”

“We spent a lot of time contemplating this,” says Eric Doctorow, president of worldwide video for Paramount Pictures. “It was an important decision because it represents a substantial amount of revenue.” Doctorow says that “Forrest Gump” will be the biggest video release in the history of the studio. “We all agreed that this is an extraordinary motion picture that millions and millions of people would want to own.

“The movie is very repeatable. It touched so many people in so many different ways. It’s an ideal sell-through title, it has a very broad appeal. It’s something people want to see again and again, and that’s an important consideration for the sell-through marketplace.”

And then there’s the simple fact that the rental market has lost some of its fire. One reason, says Matt Maxwell, a manager at the Tower Video in Sherman Oaks, is that “people can get a lot of the same stuff on pay-per-view. If you’re just going to watch it once, it’s easier to do it from home, instead of going out.”

“Our video sales have definitely increased over the past two years,” says Craig Duncan, manager of the Virgin Megastore on Sunset. Releasing titles as sell-through, he adds, “makes a major impact. With the advertising done for videos today, and the movies still fresh in people’s minds, it’s creating a new market. It’s not just connoisseurs buying them today--it’s anybody and everybody.”


The proliferation of sell-through also “affects (rental titles) a great deal,” Maxwell says. “When you have a title selling for $12, that’s about the cost of going out to a movie, and you keep it for life.”

According to Bruce Apar, editor of Video Business magazine, this is part of the studios’ master plan. “Studios have always harbored a not-so-secret desire to build up sell-through in the video business,” Apar says. “They’ve always regretted it becoming rental-dominated, where they’re not getting a piece of every rental. For them, sell-through is much more profitable.

“With rental, the manufacturers have hit a brick wall,” Apar adds. “There’s still a good deal of growth in people collecting movies in their private libraries, but with rental, they’ll only be able to move 400,000-500,000 units, even with the biggest titles. Whereas, depending on the title, the price and the time of year, there’s no limit in terms of sales.”

Sell-through is especially strong in the Los Angeles area. According to Video Software magazine, L.A. is a leader in sales of children’s video (and virtually all titles aimed at children or teens are released as sell-through).

L.A. also routinely leads the country in sales of blockbuster video releases--Angelenos captured the most copies of “The Fugitive” and have been on a rampage for “Jurassic Park.”

In the battle for video dominance this fall, however, “Jurassic Park’s” dinosaurs have been trampled by dwarfs: Manufacturers have reported that “Snow White” could become the all-time sales champ, surpassing “Aladdin’s” 24 million. In less than two months, it has sold 20-million copies of 27-million copies shipped. “Jurassic Park” has sold 18 million (of 24 million shipped), and “Speed” 5.6 million (of 8 million).



Not just big-screen hits are sell-through successes. Ken Burns’ nine-volume documentary “Baseball”--which sells for between $130 and $180--has emerged as a surprise national hit, selling more than 1 million tapes, roughly 100,000 of each episode, which is very strong for a specialty title. “I’m surprised how popular it is, considering the price,” Duncan says. Maxwell says his store sold out of its initial shipment within a week.

Still, some are not sure that those who are collecting videos will be expanding their home libraries forever. And don’t write off rental, Doctorow says: “The rental business is alive and well. It’s vibrant, it’s dynamic and it will be for a long time in the future.”

Says Kairey, “The consumer’s appetite to start collections has taken place over the past couple of years in amazing and astonishing numbers. But what can the consumer handle, how big is the consumer’s appetite? And how much can the retailer handle? There’s a finite amount of retail space--how long will your product stay up, how long can you keep retail space so the consumer can find your product?

“For the first four months of 1995, there will be a lot of product shipping direct to sell-through. The results will determine if the same thing continues in ’96. It may be that we’ll shift backward, with more titles going through the rental window first. We’ll have a better handle on this in April or May of ’95.”