Record-breaking sales and rentals of $ 1.007 billion during the holidays spurred the homevideo market to a “major comeback” in 1992, according to Bob Alexander of New York-based research firm Alexander & Associates.
A&A figures, which will be released this week, reveal that in ’92, the retail business was booming. Combined sales and rentals for 1992 reached a record $ 17. 231 billion, up a whopping $ 2.375 billion from ’91’s total of $ 14.856 billion, which had dipped from $ 14.879 billion in 1990.
The $ 1 billion holiday sales/rental figure–garnered over a period of two weeks–is a particularly significant indicator of homevideo’s strength as an entertainment medium when compared to the holiday domestic film box office total , which reached just $ 742.8 million during a holiday period defined by Daily Variety as six weeks in duration.
The holiday season is traditionally a boom period in retail video.
For the two weeks ended Jan. 4, domestic rentals hit $ 535.57 million, led by Buena Vista Home Video’s “Sister Act,” which generated $ 6.2 million, according to A&A’s figures.
For the third straight year, sell-through shattered prior records with sales of $ 471.16 million, led by BVHV’s “Beauty and the Beast” (exact unit figures will be released this week), despite lower pricetags.
“These results speak to an increased level of sophistication (whereby the) studios are getting this stuff out there. They seem to have that holiday season down pat now,” Alexander said.
The analyst said renewed consumer optimism and aggressive marketing led the remarkable rebound. “It’s a major comeback,” Alexander said.
What’s more, he added, it put to rest speculation that the homevideo industry might have peaked. “There was constant growth up to 1990, and when the growth stopped in 1991, a lot of people thought it was over.
“I think what we’re looking at, at the end of ’92, is that there’s a tremendous consumer demand. Consumer confidence has changed, the economy is changing for the positive, and the third change — after 18 to 20 months of lean times — is that I think the studios got a lot tougher and a lot smarter about how to get the product in front of the consumer,” Alexander explained.
“So now you’ve got a better market and better marketers and the whole video market just popped. The numbers surprised even us.”
Sell-through volume has risen exponentially as unit prices were lowered in the past few years. The average unit price in 1990 was $ 16.14, dipping to $ 15. 95 in ’91 and $ 15.15 in ’92, according to A&A.
Lower prices and more choice led consumers to increase spending to $ 5.86 billion in 1992, from $ 4.631 billion in ’91 and $ 3.728 billion in ’90.
“The price is dropping in the sell-through market, but what is driving the increase is the phenomenal increase in the number of units available,” Alexander said.
Average rental prices also dropped from $ 2.70 in ’90 to $ 2.45 in ’92, and Alexander believes retailers made a smart call. “It’s a very price-competitive market, and when it’s recessionary times and money is tight, it makes rental a great bargain,” and led to “a much stronger number of tapes rented,” according to Alexander.