Holy Hamburger Helper!
As movie studios attempt to sell a record number of theatrical hits on video this fourth quarter, consumers can expect an unprecedented number of rebate offers and cross-promotions, with products ranging from Tropicana juice and Hawaiian Punch to Fuji film and Duracell batteries.
Does the deluge of tie-ins make sense? Proponents say the more special offers attached to a video, the more advertising support it will get. But critics say the marketing has run amok. Citing redemption rates of less than 1%, one industry executive said, "we're being rebated to death."
"Batman & Robin," which comes out Oct. 21, is the rebate king of the fourth quarter. Warner Home Video is releasing the fourth installment in the Batman series with no fewer than eight promotional partners and rebate offers worth several dollars more than the video's suggested retail price of $22.97.
One of the most prominent promotional partners is Hamburger Helper, hot off a summer tie-in with the theatrical release of another blockbuster, "The Lost World: Jurassic Park."
Coupons for $1 off the video will be included with 25 million packages of the General Mills Inc. casserole mix. The promotion will also be spotlighted in a free-standing newspaper insert to be circulated to millions of households nationwide.
In theory, the promotional partnership will lead to higher sales of videos--and boxes of Hamburger Helper.
"Generally speaking, a rebate is designed to help lower the perceived cost of a product," said Tom Lesinski, Warner Home Video's senior vice president of marketing. "It also allows the retailer to link with another product and, in the case of, say, a grocery store, sell more batteries." (Duracell also has a Batman tie-in.)
Rebates also give studios additional exposure for their videos, both on packaging and "because we're able to tap into all the advertising the third party will do," Lesinski said.
Warner is so high on Hamburger Helper that similar rebates are being offered for four of Warner's other fourth-quarter releases: "Wild America," "Free Willy 3," "Michael" and "My Fellow Americans." The last two videos were released earlier this year at a higher retail price (about $100) but are being reissued in time for Christmas at a below-$25 "sell-through" price.
Lesinski said the Hamburger Helper tie-in is already helping the studio get grocers to carry not just the high-profile "Batman & Robin," but also the other titles.
"If you have a big brand like General Mills behind you, it's easier to get a product display," Lesinski said.
"And it's hard to get re-priced rental product ['Michael' and 'My Fellow Americans'] into stores, but this way, we're able to," he said.
Studios are scrambling to finish the year strongly--the fourth quarter is traditionally the best for sales--because sales took an unexpected downturn of about 4% in the first half of 1997, according to VideoScan, a national point-of-sale tracking service.
Nineteen major feature films are scheduled to arrive in stores between now and the end of this year, priced for direct sale to consumers. Among them are five theatrical blockbusters with summer box-office earnings in excess of $100 million each and 10 big-budget direct-to-video releases, including animated sequels to "Beauty and the Beast" and "Casper."
"I think the main thing driving [the rebates] is that this is an incredibly crowded market, compared to past years," said video industry analyst Tom Adams of Adams Media Research in Carmel. "Last year we saw 32 movies released directly to sell-through; this year, in the second half alone, we're seeing 27."
The rebate ball got rolling in the late 1980s, shortly after the major studios first began releasing certain hit movies at a low price for direct sale to consumers rather than to video rental stores. One of the first big titles with a rebate was MCA Home Video's "E.T.," which was released in November 1988 with a $5 mail-in rebate offer with Pepsi.
The video shipped an unprecedented 12.5 million units, and other studios went to school. Within two years, rebates had become commonplace, and as the trend spread, one executive recalled, studios began lining up multiple partners "in an effort to outdo each other."
This year, other promotional partners Warner has lined up to support "Batman & Robin," in addition to Hamburger Helper and Duracell, are Kenner toys, Fuji film, Act II popcorn, Hawaiian Punch, Apple computers and Time Warner's music division.
Universal Studios Home Video on Nov. 4 will release "The Lost World"--at $225 million the summer's second-biggest theatrical grosser--with support from six promotional partners, including toy and game makers Hasbro, Tyco and Tiger Electronics. Consumers who buy the video and six cans of Tropicana orange or grapefruit juice get a $5 mail-in rebate as well as a chance to win a Hawaiian vacation; Discover Card holders who buy the video get a free pair of binoculars.
Walt Disney Co.'s classic "Sleeping Beauty" was awakened on video on Sept. 16, for the first time in 10 years, supported by a $5 mail-in rebate with the purchase of a Coke, a $2 rebate with the purchase of Disney's "Love Bug" tape and rebates totaling $50 on Playskool products.
"A lot of it is obviously price pressure," said Glenn Ross, senior vice president of Hallmark Home Entertainment, a division of Hallmark Cards Inc.
"If consumers buy a video and get coupons worth a certain amount of dollars, they see that as lowering the price of the cassette," Ross said.
"And at the same time, rebates are valuable for us when we try to convince retailers to give us shelf space. Many of the retailers who carry sell-through video are supermarkets, and cross-promoting videos with other products they carry keeps people in their stores," he said.
Not every company is keen on rebates. Some studio executives as well as retailers feel rebate fever has gone too far.
When Columbia TriStar Home Video began drawing up marketing plans for its Nov. 25 video release of "Men In Black," the biggest theatrical hit of the year, it was decided to attach just one rebate offer: a $10 discount on a pair of Ray-Ban Predator-model sunglasses, which are prominently featured in the film.
"The redemption level for rebates is very small, somewhere between a quarter and a half of 1%," said Paul Culberg, Columbia TriStar's executive vice president.
"I don't think the consumer even considers it [a rebate] unless it's integral to the film."
As for the additional exposure that comes from having promotional partners broadcast video rebates in their own advertising and packaging, Culberg maintained, "I think it's at best a peripheral impression."
Matt Feinstein, vice president of Los Angeles-based Marbles Entertainment, which operates video departments in 22 Vons and Lucky supermarkets in Southern California and Nevada, said making cross-promotional rebate offers work takes a lot of planning.
"If we know about them in advance, we can coordinate something like we did when Disney cut a rebate deal with dog food to promote '101 Dalmatians,' " Feinstein said. "We put a display of videos right next to the dog food and did quite well.
"But a lot of times supermarkets are not aware of these promotions until they happen. . . . Studios need to make us aware of these offers well in advance, so we can take advantage of them."
Thomas K. Arnold is editor of Video Store magazine, a trade publication covering the home video business.