World’s No. 3 Video Market Feels The Big Chill

A chill wind is blowing through the U.K. video biz.

The failure of big-spending distribs Parkfield and Stylus has underlined the dangers of over-extending in a boom business still in its infancy.

The U.K. vid biz was worth some £ 605 million in rentals and £ 360 million in mainstream retail sales in 1990, well ahead of any other European market and third only to the U.S. and Japan.

While rental struggled with a 5% growth rate in 1990 (well below inflation), sell-through last year increased by 25%.

One rental exec beefs: “The numbers are in favor of sell-through, mainly because of the incredible number of new outlets who have movies for sale. Most are small corner stores who weren’t in video before.”

Adds Derek Mann, chairman of the Video Trade Assn., whose 1,200 members represent 2,500 outlets, “You may earn 22% on a film you’ve just sold. But you could also be responsible for one less rental customer.”

Strong penetration

Britain still has the highest VCR penetration in Europe – 66.3% – and the greatest number of vid outlets – 25,000, mostly corner candy stores and news agents who stock rental videos as a lucrative sideline.

Half of the 14.5 million VCR owners have never visited a video store, and only 28% go weekly. Thus, growth potential is great.

Many experts now look to better marketing to revive the industry. This year, the industry launches its first-ever generic ad campaign, supported to the tune of £ 10 million by leading distribs. It will be product-driven and will stress the advantages of video over satellite tv, which is seen as a major potential rival. The campaign will point out that by the time movies are shown on the £ 10-a-month pay channels, they are already available for an average rental of £ 2 a night.

Despite the industry’s ills, specialist video stores are still breaking out like brush fires. There are already some 6,000, and they account for 70% of rentals – 10 times more than the far more numerous candy stores. The Ritz chain, part of the Cityvision group, has grown from nowhere to 800 outlets in four years. The U.S.-based Blockbuster group has opened 26 superstores and is looking for more sites.

Specialists have caught on to the profits in sell-through, though their estimated 13% share of the market is only half of that cornered by Woolworth. But according to Taylor Devine, Blockbuster’s U.K. operations veep, “The percentage of growth is greater in sell-through than rental, but in number of units, rental is a bigger business.”

Retailers are anxious about the media mountains left by Parkfield, which went to the wall owing a reported £ 309 million, and to a lesser degree, Stylus. Parkfield over-ordered for Christmas 1989 and finally drowned last summer under a deluge of sell-through product from Hollywood majors, which its exclusive contracts wouldn’t allow it to return. Its distribution operation has been picked up by U.S. wholesaler Ingram Video.

Whereas feature films dominate rentals – about 80% – just under 40% of cassettes sold are movies. Children’s titles account for 25% of sales; leading the charge were the Teenage Mutant Ninja Turtles, on the Abbey Home Entertainment label launched in July. Disney’s “Lady And The Tramp” also broke through the million barrier.

More News

  • Grown-ish

    'Grown-ish' Renewed for Season 2 at Freeform

    A chill wind is blowing through the U.K. video biz. The failure of big-spending distribs Parkfield and Stylus has underlined the dangers of over-extending in a boom business still in its infancy. The U.K. vid biz was worth some £ 605 million in rentals and £ 360 million in mainstream retail sales in 1990, well […]

  • Amazon Emmy Celebration, Arrivals, Los Angeles,

    Luke Kleintank Joins 'The Goldfinch'

    A chill wind is blowing through the U.K. video biz. The failure of big-spending distribs Parkfield and Stylus has underlined the dangers of over-extending in a boom business still in its infancy. The U.K. vid biz was worth some £ 605 million in rentals and £ 360 million in mainstream retail sales in 1990, well […]

  • Wes Ball, Gotham Group Developing Suburban

    Wes Ball, Gotham Group Developing Suburban Horror Film 'The Chrysalis'

    A chill wind is blowing through the U.K. video biz. The failure of big-spending distribs Parkfield and Stylus has underlined the dangers of over-extending in a boom business still in its infancy. The U.K. vid biz was worth some £ 605 million in rentals and £ 360 million in mainstream retail sales in 1990, well […]

  • Disney-Pixar Hires New Screenwriter for 'Toy

    Disney-Pixar Hires New Screenwriter for 'Toy Story 4'

    A chill wind is blowing through the U.K. video biz. The failure of big-spending distribs Parkfield and Stylus has underlined the dangers of over-extending in a boom business still in its infancy. The U.K. vid biz was worth some £ 605 million in rentals and £ 360 million in mainstream retail sales in 1990, well […]

More From Our Brands

Access exclusive content