The Waiting Time Is Shrinking for Video ‘Sell-Throughs’

Popular movies are cropping up at video stores, supermarkets and gas stations with breathless speed.

The latest proof: Twentieth Century Fox Home Entertainment will today release the video of “Waiting to Exhale,” the modest hit that premiered barely four months ago and is still playing on 71 screens nationwide.

In its rush to video shelves, the video unit of Twentieth Century Fox Film Corp. is focusing not on rental stores but rather African American households the studio hopes will pay $19.98 for their own copy of the comedy about the romantic tribulations of four black women. In so doing, Fox is joining an industrywide shift toward the rapidly growing “sell-through” market.

Fox executives said they had to move fast to take advantage of the positive word-of-mouth the film generated during its theatrical run. “Waiting to Exhale,” starring Whitney Houston and Angela Bassett, has grossed more than $67 million in U.S. theaters.

“The film gathered a following as it went along,” said Bruce Pfander, senior vice president of marketing at Fox Home Entertainment. “This is the right window [for video release] . . . the usual rule of thumb is about six months” after the theatrical premiere.

While planning the video release, the studio armed itself with market research showing that many women, white and black, said they would buy the movie on videocassette. Industry experts said women are more likely than men to purchase home videos.

Surveys also showed an uncommon awareness of the film among black viewers. A poll of 400 consumers, half of them African American, revealed that 72% of black respondents said they would “definitely or probably” buy the video. In its bid for the African American market, Fox has launched a cross-promotion with Maybelline Shades of You, a makeup for black women, and is advertising in such magazines as Essence and Ebony.

Yet Fox’s strategy rests on more than just the considerable economic clout of black consumers. Inspired by the blockbuster success of “The Lion King,” which Walt Disney Co. said sold 30 million units on video, and other family-oriented titles, studios are shifting their attention from rentals to the sell-through market.

“It’s clear that sell-through has met with the wide acceptance of the consuming public,” said Bob Finlayson, spokesman for the Encino-based Video Software Dealers Assn., an industry trade group.

Indeed, U.S. video purchases leaped from $3.10 billion in 1990 to $7.29 billion in 1995, an increase of 135%, according to the dealers association. Meanwhile, rental spending increased only 16%, from $6.7 billion in 1990 to $7.76 billion last year.

Yet the sell-through market still carries big risks. Because studios typically price rental releases at $75 or more, the profit margins are very high, often more than 50%. But the $19.98 price common among sell-through titles means a much lower margin for the studio, often 35% to 40%. Studios generally need to sell 4 million units to equal the profit earned on a rental title. Marketing costs are higher as well; Fox is spending $8 million to promote the video release of “Waiting to Exhale.”

But the studio is betting the movie will prove a keeper for its target audience.

“This is a film that maybe a lot of people didn’t have a chance to see in theaters,” Pfander said. “It’s tended to grow in crossover appeal.”