Vid Execs Hunker Down In Tight Market

Disciplined spending and quality product are the key phrases for most video buyers and sellers heading to the American Film Market.

“There might be some dropoff in attendance due to fear of flying,” says Media Home Entertainment prexy Glenn Greene, but since most vid companies have local representatives, the significance of any absences is expected to be minimal.

“Though entertainment usually does well in a recession, I don’t know if that is true today with this range of choices,” says David Winters, chairman of Action Intl. Pictures. While the networks and cable may hurt rentals, Winters says sell-through is certain to suffer. “People are more likely to buy groceries,” he says. “People are scared, and so they will buy the necessities.”

Lawrence Friedricks, executive v.p. of international distribution at Fries, says even if AFM isn’t hurt directly by the recession, the effects of an industrywide downward trend will be felt. “In the last year or so, homevideo overseas has bottomed out,” Arista Films prexy Lou George points out.

“The shelves are full,” adds Fox Lorber prexy Richard Lorber. “Hot areas are all but indefinable, and there is a succession of genres that are appealing for 15 minutes or so in each territory.”

Increasing availability of television in many European countries has led to a soft video market, say industry insiders. Lorber adds,” The only growth area is in television. This year’s AFM will be driven by tv buyers.”

Sell-through is generally weak overseas, even in the U.K. Even the appeal of Eastern Europe as a blossoming market is offset by spending the still-limited numbers of VCRs. While Eastern Europe may be less discriminating now, Friedricks believes the region will mature “double time,” demanding quality product earlier than other territories.

There are some bright spots: Overall business should be more profitable in Latin America and the still-strong Far East after recent anti-piracy efforts, and Friedricks adds, “Germany should be fairly buoyant.”

Lorber says his buyers are telling him, “‘I don’t know what I want anymore; just give me a real movie.'” Action pics still have the widest appeal of any genre, but significant theatrical, art-house or festival play is increasingly crucial as a legitimating factor overseas, he maintains.

Arista Films is also adapting to this new atmosphere. “Independents cannot afford to play ball with the big boys,” George says, so Arista will concentrate on art-house films. George points out that while Arista will have action films at AFM, it is “actively searching for art product.”

Burger lust

There is still room for genre videos, counters Jim Glickenhaus, chairman of Shapiro Glickenhaus Video (of “Basket Case” and “Frankenhooker” fame). “Sometimes you are in the mood for it,” he says. “There are nights you’d rather go out for a bacon cheeseburger than go to Lutece.”

However, Glickenhaus is alarmed by the domination of the rental charts by big-budget theatrical failures like “Another 48 Hrs.” and “Robocop 2.” “These will be the new B titles,” he says. “There will no longer be a need to rent lesser titles.”

AIP prexy Eric Parkinson says secondary titles could benefit in the long run as people become more open to renting videos regardless of theatrical success. Barry Collier, chairman of Prism, also disagrees with Glickenhaus, saying big-budget bombs are still A titles and will steal business from other A titles, not the independents. But he also acknowledges, “There is now a smaller piece of the pie for B product.”

Two years ago, about 60% of the titles in video stores were A titles; today, says Collier, that figure is up to 85%. “The high cost of movies has the studios putting real pressure on the marketplace,” he says. “It is worrisome, but you have to adjust your business plan accordingly.”

Collier is confident, however, that the indies’ slice won’t get any smaller. “A titles have a sharp drop-off,” he notes, “while a B’s life is more enduring. [ Indies] can’t survive on the hits; there aren’t enough hits.

“We tried to attack this issue by buying more, but that didn’t work,” he continues. “Now we have to focus on the piece of the pie that is there.” Thus, he believes this year’s AFM will be crucial for the indies; As they try to buy fewer titles, their margin for error will shrink.

Parkinson maintains this is merely a “swing of the pendulum.” When fewer videos are available, he says, there will be an increase in consumer demand and a re-emergence of secondary product and genre films.

But Glickenhaus parallels the initial success of the video industry with the early years of movies, when people would pay to watch a film of horses running around. “When people first bought VCRs, they would rent anything,” he says. “In the past you could sell videos no one ever looked at; people were selling artwork and boxes.” With the novelty wearing off video, “The emperor has no clothes,” he says. Low-budget horror films, which flooded the market between 1983 and 1987, are a perfect example, says Mel Layton, v.p. of acquisitions at Republic Pictures. “Horror fans themselves got sick of it,” she explains.

New genre: the erotic thriller

There are, however, some successful new genres emerging. With some video stores not carrying X or even NC-17 movies, Collier says the erotic thriller, which is both more stylish and acceptable than even soft-core, will replace X movies for many adult male viewers.

“The thriller has always been a good genre, in literature and on the screen,” Layton adds. “With a strong story, you can produce them on a lower budget and make them look good [ compared with horror, action or sci-fi genres]. It doesn’t cost much for people to take their clothes off.”

At this year’s AFM, comedy and family-oriented films will be the most sought after, according to Trisha Robinson, senior v.p. of production and acquisition at Academy Pictures.

Several companies say this year’s L.A. market will be most noteworthy for its lack of buyers. Films that would have sold in the past, says Parkinson, “will not even be getting bids.”

Many executives say making deals is not top priority at this year’s AFM. Steven Einhorn, prexy and chief operating officer of New Line Home Video, says that as a new company, New Line is more interested in establishing long-term relationships. Carolco’s Christopher Holm says his firm will emphasize marketing and publicity at the market, and Greene says Media, which has restructured to expand its motion picture production, will be there mostly to talk with distributors about new strategy.

Winters predicts a decline in advertising at AFM due to exorbitant costs. In fact, AIP is going even further. “We are positioning ourselves differently,” Winters says. “Our goal is to be in every major territory in five to 10 years. Then we won’t need the markets.”

Winters says eventually AIP will be able to send a salesman anywhere for a one-on-one for less than the cost of AFM. But he adds that this may be prohibitive for most companies and will have a minimal effect on AFM.

Gloom and doom

Glickenhaus foresees a much gloomier future, one in which the strongest indies are forced to merge to survive. “Five years from now, I don’t think there’ll be an AFM,” he says. “There won’t be a need for it; there won’t be independents as we know them.”

Though most executives agree about the continued shakeout, few are as pessimistic about the future of AFM. One top video executive did say that the “new video math” will alter the market. “With restrictions on bank credit as the banks become more conservative or retreat from the marketplace, there will be more product in the short term as companies need to liquidate their assets,” the executive says. “The fundamental effect is that fewer companies will get money, and higher quality product will result as discipline increases.”

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