See it again, and again, and ... Lower prices push sales of videocassette movies close to rentals; big promotion budgets help, too
Boston — ``Oh, the price one has to pay to be a movie mogul ... $19.95 to $29.95 each,'' chirps a videocassette advertisement. Americans these days are paying eagerly. At a pace that has the real movie moguls crowing, sales of videocassettes continue to climb. And this year, for the first time, movie studios are expected to earn more from home video sales than from theater box office revenues, even though theaters packed in big crowds all summer.
Now that more than half of America's homes have videocassette recorders, home video producers are paring prices on many movies and pouring millions of dollars into advertising campaigns to urge consumers to buy, rather than rent, their favorite movies.
Video sales are climbing far faster than rentals. Of the $5.3 billion generated by the video industry last year, 36 percent came from sales. Tim Baskerville, publisher of Video Marketing Newsletter, in Hollywood, Calif., predicts sales this year will be 43 percent of the total. In the last two years, prices on the video versions of the most popular movies have been cut from $79.95 to a special promotion price, averaging $29.95.
Still, why do people pay $20 or $30 to own a movie cassette when they can rent it whenever they want for $2 of $3 a day?
``Anything that's likely to encourage repeat viewing, whether it's a how-to program, or a children's program, or a classic film with great action or great sound track - any one of those factors could encourage sell-through [consumer sales],'' says Mara Balsbaugh, a video industry analyst at Smith Barney, Harris Upham & Co.
In addition, the pricing on cassettes has come down, she says, and that has made some of these ``more accessible'' to people who might want to own them.
``There's a collecting mentality out there,'' says David Cline, vice-president of sales at Embassy Home Entertainment. ``It's just like records or books or anything else. ... When you have films that touch emotional places in people, there is a reason they would like to possess that film.''
Last year's sales of Embassy classics at $24.95 exceeded the studio's expectations. Its titles, including ``The Trip to Bountiful'' and ``The Cotton Club,'' list for $19.95. ``Today what can you buy for $20?'' Mr. Cline asks. ``You can't even buy a decent tie.''
Walt Disney Home Video, which stunned the industry last year by spending $6 million to promote the video version of ``Sleeping Beauty,'' will more than triple that amount to advertise ``Lady and the Tramp'' this fall.
Disney's holiday campaign - the broadest marketing the studio has attempted for a videocassette - will include heavy national TV and print advertising, as well as promotional tie-ins with McDonald's and the American Dairy Association. Disney predicts that sales of ``Lady and the Tramp,'' at $29.95, will nearly double those of ``Sleeping Beauty,'' last year's top selling video, which also cost $29.95.
Lorimar Home Video has whittled the prices of the popular Jane Fonda exercise tapes since the original ``Workout'' retailed at $59.95. Her latest sells for $39.95.
Ads for these tapes have begun appearing in consumer magazines such as Glamour, Ladies' Home Journal, and US.
Not all videos are priced under $30, but they still receive heavy promotion budgets. For its forthcoming release of ``Platoon,'' priced at $99.95, HBO Video will spend $1.5 million on a series of TV ads, its largest advertising budget so far for a single cassette.
To keep prices down, videomakers have been looking for sponsors to put commercials on cassettes. The Pepsi-Cola ad at the beginning of ``Top Gun'' earlier this year, an industry first, helped defray costs and bring the price down to a bargain $26.95. But advertisers are not easily wooed at this point, perhaps because it is difficult to measure the impact of a spot on video.
One thing everyone agrees on: The videocassette has become a mass consumer product. ``A lot of the marketing programs [for cassette sales] that have been done in the last year and a half have greatly stimulated that kind of demand,'' says publisher Baskerville. ``It's no longer the plaything of the rich and the gadgeteers.''
To meet the surging demand for cassettes, video outlets are expanding their inventory. Video supermarkets, which carry an average of 15,000 titles, are on the rise. The mom-and-pop operations (750 titles or fewer) that pioneered the industry have been forced to grow or die out as customers have flocked to stores with a better selection, says Richard Kelly of Cambridge Associates, a consulting firm in Stamford, Conn.
On the other hand, Mr. Kelly says, convenience stores, drugstores, and grocery stores, which deal only in the top 50 or 100 titles for a given six-month period, are also doing surprisingly good business with videos.
Their handy location and late hours are a big draw. And customers are more likely to get the tape they want, because these stores can easily stock 25 or more copies of a hit movie, whereas a video store might have only 10.
To give VCR owners a better picture when they buy or rent videos, manufacturers have been developing new VCR formats. Super VHS, a new recorder by JVC Corporation now in some stores, uses 67 percent more lines of horizontal resolution to get clearer, more detailed pictures. The machine plays both Super VHS and regular cassettes.
Kelly thinks Super VHS will appeal to consumers for recording purposes even if movies aren't yet available on it.
As the price of the recorders works down from its present $1,200, he expects demand for better-quality movies to increase.