Video Sellers Expect Slim Pickings in 4th Quarter

For retailers who sell rather than rent videos, the next holiday season promises to be anything but jolly.

For starters, the fact that studios are now sharing revenue with rental dealers has put a serious dent in the number of big “event” titles being released directly at a low price for sale to consumers.

“The strength of releases this year, because of revenue-sharing, is a fraction of what it has been in the past,” said Joe Pagano, vice president of movies and music for Best Buy, a 318-store home entertainment chain based in Eden Prairie, Minn. “And we are concerned, because it appears the stream of titles that would have gone directly to sell-through in years past--those that did more than $100 million at the box office--is being channeled into rental.”

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Then there’s the “Titanic” factor. Released on video in September 1998 at a suggested list price of less than $20, the theatrical blockbuster about the doomed ship quickly became the top-selling video of all time, moving nearly 30 million units before the year was up.

“That’s going to have a big impact,” said John Thrasher, vice president of video for Tower Records/Video, a 100-store chain based in West Sacramento. “Any time you take out 30 million cassettes, that’s going to hurt.”

Vinnie Losasso, director of video purchasing and operations for Hastings Entertainment of Amarillo, Texas, said he expects fourth-quarter VHS video sales at his 138-store chain to be down between 10% and 15% from last year.

“The studios are just not putting out the product for the fourth quarter,” he said. “It’s going to be a weak quarter for sell-through, which is a shame, because we always saw great fourth-quarter sales.

“In the beginning of the year, we were anticipating a decline in our VHS business, but at the time we thought it was going to be more due to DVD than to the fact that there isn’t any product in the fourth quarter.”

In the fourth quarter of last year, retailers were selling huge numbers of low-priced hits such as “Godzilla,” “Lost in Space,” “My Best Friend’s Wedding” and “Dr. Dolittle.” This year’s crop doesn’t appear to be anywhere near as strong, retailers say.

Only two big titles have been announced for sell-through, Universal Studios Home Video’s “The Mummy” and DreamWorks Home Entertainment’s “Prince of Egypt.” And the only other candidates on the horizon are “Austin Powers: The Spy Who Shagged Me,” “Big Daddy” and possibly “Wild Wild West” and “The Blair Witch Project.”

It was widely expected--or at least hoped--that Warner Home Video would release “The Matrix,” the year’s No. 3 box-office grosser, directly to sell-through in the fourth quarter.

But despite theatrical earnings of more than $168 million, the sci-fi action film is being released to the rental market first, on Sept. 21.

Warner has announced it is cutting the normal six-month re-pricing window down to nine weeks, with a collector’s edition video coming Nov. 23 at a minimum advertised price of $14.98.

But Pagano, for one, isn’t placated.

“While it’s nice that the window has been narrowed, I think they’re missing the point,” Pagano said. “The real damage is done by the huge numbers of previously viewed revenue-sharing copies retailers will be selling for $5 very shortly after street date, but before they put it out for sell-through.”

A Warner spokeswoman declined to comment.

The paucity of big fourth-quarter sell-through titles isn’t lost on studio executives such as David Bishop, president of MGM Home Entertainment.

“We’ve been talking to a lot of major retailers, and they have told us they are concerned about the lack of sell-through product in the fourth quarter, and how it doesn’t measure up to last year’s release slate,” Bishop said.

With perhaps the biggest film library in Hollywood, MGM is a master of the catalog promotion, and that’s what retailers should be focusing on this year, Bishop said.

To coincide with the theatrical release of the next James Bond feature, “The World Is Not Enough,” MGM on Oct. 19 will reissue seven vintage Bond films at suggested retail prices of less than $15.

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MGM is also re-releasing the Beatles’ “Yellow Submarine,” with restored footage and a new song, “Hey Bulldog,” that was not included in the original theatrical release of the film 30 years ago.

Both titles will be supported by national ad campaigns and promotional tie-ins, with the Bond collection getting support from Visa and Hershey’s.

“We try to look for as many events as we can create out of our library as possible,” Bishop said.

Other home video suppliers also are scrambling to fill the void. Warner is pumping millions of dollars into marketing a direct-to-video feature film starring Scooby-Doo, the animated canine sleuth from the early 1970s. “Scooby-Doo and the Witch’s Ghost” will be released Oct. 5 and sell for less than $20.

Warner is also touting a collection of children’s Christmas videos, including “How the Grinch Stole Christmas.” Also promoting holiday children’s video packages are Buena Vista Home Entertainment and Artisan Home Entertainment.

Buena Vista, Walt Disney Co.’s video distribution arm, is also re-releasing another of its animated classics, “The Great Mouse Detective,” on Aug. 31, followed a month later by the live-action “My Favorite Martian,” which earned just $36 million at the box office.

Fourth-quarter sell-through plans at 20th Century Fox Home Entertainment are centered around “Bartok,” a direct-to-video feature starring the animated bat from last year’s theatrical hit “Anastasia”; a collector’s edition of the cult favorite “Young Frankenstein”; and the first installment in the studio’s Millennium Collection, consisting of 20 films starring famous leading men, from Gregory Peck (“Gentleman’s Agreement”) and Charlie Chaplin (“City Lights”) to Tom Hanks (“Big”) and Keanu Reeves (“Speed”).

“The big direct-to-sell-through titles are the dramas of the business, but catalog is the backbone,” said Steve Feldstein, Fox’s vice president of marketing and communications. “And Fox has become very adept at creating an event around catalog titles, with our past successes with the ‘Star Wars’ trilogy, ‘Planet of the Apes’ and ‘Alien.’ ”

Retailers agree that catalog video sales will be more critical than ever.

“On the VHS video side, I think we’ll be down about 5%, and I don’t think there’s anything you can do but try to put together catalog promotions and hope you get a lot of re-priced items coming down, like ‘Saving Private Ryan,’ ” said Tower’s Thrasher.

“Fortunately, we are not completely hit-driven. If you live and die by the hits, like the mass merchants, it’s going to be a lot worse.”

Best Buy’s Pagano believes that any fourth-quarter declines his chain may see in VHS video sales “will be more than offset by DVD.”

He notes that “Titanic,” last year’s big video hit, will be available on digital videodisc for the first time this fourth quarter, as will most other major movies coming to video.

Thomas K. Arnold is editor in chief and associate publisher of Video Store Magazine, a weekly trade publication serving the home video industry.