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Sell-through Booming As Video Rentals Linger

For years the video sell-through market has orbited around the enormous sell-through popularity of such box-office powerhouses as “Jurassic Park” and “Snow White and the Seven Dwarfs,” two of the biggest sales titles this past fall. And while the strong presence of these studio blockbuster titles during the holiday season often can offset the balance of sell-through dollars vs. rental dollars for the year, the fact remains that sell-through accounted for nearly 50% of consumer expenditure on videos last year, while rental growth remained flat.

With videos available at sell-through prices ranging from $9.99 to $19.95 (often including rebates and related-product promotions), consumers are building video libraries of movies and alternative, non-theatrical programs. It is this type of specialty programming, along with the staple of genre-driven rental-priced titles, that independent studios must consider and adapt to prosper in the ever-changing video marketplace.

“There will always be an audience for rental-priced action movies,” says Sundip Shah, executive VP of Imperial Entertainment. “The video market for T&A films and erotic thrillers has dried up and pay-per-view has too many major films to put those kind of films on rotation. Indies have to stick with the action.”

Second-tier action films such as “Ring of Fire” and “Forced to Kill,” and such stars as Don (The Dragon) Wilson and Corey Michael Eubanks have been a consistently profitable product for indies since the mid-’80s video boom. These efforts are budgeted anywhere between $3 million to $6 million, a sizable increase over similar action product from several years ago.

“You have to spend money to make a top action film. Consumers are now very sophisticated, so it has to look ‘A,'” says George Shamieh, president of PM Entertainment, producer of the upcoming “Hologram Man” and “Cybertracker.” “We’re raising our budgets from $1.5 million to $5 million, with action comparable to big-budget films, but with lesser-known talent. Now, people who rent these videos are getting 60 minutes of high-level action scenes with the story. No Schwarzenegger or Van Damme, but there is Jack Scalia and Jeff Wincott.”

Shamieh says that, while sell-through product “can work” for indies, it won’t be able to save struggling indies that don’t develop higher-quality features that require “rental, cable and foreign sales.” Indies may continue to produce and distribute lower-budgeted films that may find an audience as video rentals, but it is doubtful these films will find buyers or anything more than incremental income at the sell-through level.

“The bottom line,” says David Jackson, president of distributor Showcase Entertainment, “is that people don’t want to collect movies they’ve never heard of. Indies can’t compete with the big studios so motion pictures won’t work. Children’s and specialty videos work for sell-through.”

Rental-priced features on video ($79.95 to $99.95) are dropped in price ($9.95 to $19.95) six months to a year after their initial release date and usually following any pay-per-view or cable premieres. New York-based Arrow Entertainment, in an effort to place more units on store shelves, releases their line of lesser-known genre features at a retail price of $49.95 and those with theatrical exposure at $89.95, a pricing strategy that works, according to Jules Abramson, VP of sales and marketing.

“You’ve got to have a sensible approach and a good mix of titles. There is still an appetite for these kinds of films, especially with a retail price of $49.95” Abramson says. Arrow’s latest $49.95 release, the action-thriller “Abducted II” starring Dan Haggerty and Jan Michael Vincent, pre-booked 14,000 units in January, an impressive number for a sequel to a little-known ’80s feature. The double edge to the price-reduction sword is that retailers may perceive a less expensive rental title as an inferior film, but Abramson holds that “a good story, competent production values and a hook will get the distribution people to talk up the title with retailers.”

The growing interest in children’s and family-geared programs is being met by the indies as an opportunity to penetrate the burgeoning sell-through market with fresh product that doesn’t require theatrical exposure or the plundering of a film library. Aggressive, creative marketing with the possibilities of merchandising and franchise development can create a collectible product for hungry consumers with families.

“Americans are a group of people who like to collect,” says Don Gold, VP of sell-through for Trimark’s Vidmark label. “They want a handsome-looking shelf with all the videos in a row. And kids will watch a video 100 times and then want something new.”

Trimark is responding to the burgeoning children’s sell-through market with “The Adventures of Blinky Bill,” an animated Australian children’s series Trimark will release as a video line in March.

Power promoting

Live is releasing Japanese animated favorite “Speed Racer,” and other indies are acquiring and producing their own children’s sell-through programs. The rewards for successfully promoting a brand franchise, as Saban Entertainment did with “Power Rangers,” can be great.

Gold’s kidvid sell-through tactic for Trimark is to “find franchises we can nurture, launch them properly with the right promotional partners and give customers something they’re looking for at a good price.”

In the spirit of their fringe roots, indies are investigating action-oriented programs for sell-through. At a reduced sell-through price of $19.95, Trimark’s “Ultimate Fighting Championship” prebooked more than 100,000 units, the largest prebook in Trimark’s history. PM Entertainment is producing a line of sell-through animation as it readies a sell-through line of women’s professional wrestling programs for the spring.

This type of fare may have a better opportunity of turning a profit for indies that can’t provide the marketing and television support required by lesser-known family and children’s product. It is genre-driven features, still referred to as B movies, that continue to keep indie suppliers on video store shelves. Some say “B movies are dead,” but B’s continue to be produced with bigger budgets for more sophisticated audiences.

Indies are finding that there is still an audience willing to spend a couple of dollars to rent a title with some name recognition, solid box art and word-of-mouth. Industry leaders are keeping an eye on indies such as Arrow, and more recently, Hemdale, whose newly instituted pricing strategies for features are closing the gap between rental and sell-through price points.

With the growing popularity of such new home entertainment options as multichannel cable systems, pay-per-view and CD-ROM, this may be the only course to guarantee that retailers will continue spending their open dollars on indie product.

“A low-end indie can survive without sell-through, says Arrow’s Abramson, “but making good product more affordable for the retailer couldn’t hurt.”

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