Paramount’s cautious move to forgo an initial sell-through campaign for “Ghost” may have retailers grumbling and rival studios taunting, but marketers undoubtedly will be scrutinizing the recession-era strategy.
Despite the film’s megahit revenue levels of $212 million, Paramount is skittish about releasing a sell-through outside the fourth quarter/Christmas season, especially during a recession. A studio statement says that “current economics and the political climate has made [consumers] cautious in all their purchases.”
While an anonymous exec at a rival studio uses an unprintable synonym for cowardly to describe Par’s decision, others are more tactful. “It took us by surprise,” says a top Buena Vista Home Video exec. “We probably would’ve released it as sell-through.”
BV did just that with Touchstone’s “Pretty Woman,” the big competitor for “Ghost” in last year’s theatrical B.O. races. The strategy has paid off: Industry sources estimate unit sales of “Pretty Woman” are well beyond the 5 million mark. Apparently hoping to extend the gift-giving season beyond the fourth quarter, BV is using tv ads to position “Pretty Woman” as a Valentine’s Day item.
The considerable cost of such a campaign undoubtedly played a significant role in the “Ghost” decision. Sell-through campaigns can yield huge profits, yet their marketing costs make such ventures riskier than rental campaigns. Saul Melnick, a New York video consultant, says studios can spend twice as much on ads to convince consumers to break the rental habit and buy.
According to Melnick, the ad budget with a rental campaign is relatively small compared with the rental revenue and the income generated from diehard fans willing to spend $99 for a title. “When you switch to a sell-through,” Melnick says, “the percentage of sales spent on advertising becomes much greater.”
While “Pretty Woman” and “Ghost” encourage easy comparisons – both were sleepers that caught fire with audiences, prompting ad nauseam ruminations on the public’s need for romance – the difference in their homevid releases is considerably less ethereal.
BV released “Pretty Woman” in 1990′s fourth quarter, while Par is pushing for a March 21 release. “Ghost” will carry the equivalent of a $100 retail price, compared with the sell-through price of $19.95 for “Woman.”
The surprised BV exec says Paramount, like BV, relies heavily on “sophisticated studies” in determining consumer willingness to buy a particular title. Par’s research, the BV marketer suggests, apparently “didn’t add up” to a sell-through attempt.
Research or no, even the BV exec concedes that such decisions ultimately are dart-tosses. The doctrine of once-bitten, twice-shy might play as important a role as any computer data. Last year’s releases of “Honey, I Shrunk The Kids,” “Indiana Jones And The Last Crusade” and “Lethal Weapon 2″ – three major titles released outside the fourth quarter – were viewed as an “experiment” to see if the sell-through season could be extended, says Amy Innerfield, vice prez and g.m. of New York’s Video Flash, the consumer video tracking division of Alexander & Associates.
While Innerfield puts the unit sales of the three titles between 3 million and 4 million, she notes that some execs have confided disappointment that the sales weren’t higher.
Paramount would not disclose its marketing budget for “Ghost,” but according to senior v.p. Eric Doctorow, the cost will be significantly greater than for any other Paramount rental title (VARIETY, Feb. 4). The studio reportedly hopes to sell 500,000 units, earning gross revenues of about $30 million.
“With a rental,” says Innerfield, “a studio basically has two waves to make money, especially with a title like ‘Ghost.’ That movie will rent like crazy and the really committed people will buy it at $100, especially with all the publicity this film has received.” Second wave hits when Par cuts the price to go sell-through. The studio says that won’t happen for at least six months.