Direct-to-video releases have risen sharply in the sell-through market, as both animated and live-action titles have benefited from growing consumer acceptance of nontheatrical product.
This trend is especially favorable for supermarkets that concentrate heavily on family fare and for those that maintain continuous sell-through programs. "It's very helpful when you're trying to bring in a new title a week as we do," said Matt Dillon, video director of the Concordia, Kan.-based Boogaart Retail division of Fleming Cos. "We carry everything in sell-through. January was a weak month for titles, so we brought in fitness tapes."
Not long ago studios considered theatrical exposure very important to public perception. They often gave films bound for sell-through limited theatrical release in a few key cities as a marketing ploy. Warner Bros., Burbank, Calif., for instance, took this tactic with "Shiloh."
Today consumers no longer see the direct-to-video tag as a stigma. Indeed, the category boasts the top video of 1998, as selected in December by Entertainment Weekly magazine: "Kiki's Delivery Service," a Japanese anime import from Buena Vista Home Entertainment, Burbank, Calif.
This shift in perception has resulted in remarkable growth for the category. From only two major titles in 1994, the number of direct-to-video releases grew to 29 in 1998, according to Quentin Lilly, chief executive officer of Technicolor Packaged Media, Camarillo, Calif.
With a wealth of product for retailers to choose, there is room for a variety of approaches. "We bring in the big titles chainwide," said Matthew Feinstein, vice president of Marbles Entertainment, Los Angeles. "The others, like Power Rangers or Teletubbies, we bring in depending on popularity in the community. The kids tell their parents and their parents tell us what they want."
"There's a tremendous amount of product and a clogged pipeline, so we're very selective with nonhit product," said Greg Rediske, president of Video Management Co., Tacoma, Wash.
"We've been picking up direct-to-video releases in smaller quantities," said Clifford Feiock, video coordinator at Nash Finch Co., Minneapolis. "But we try to bring everything in."
Direct-to-video production, which is largely family-oriented in the sell-through market, has risen in response to customer requests. "Consumers have told us they want more and more family product," said Bob Chapek, senior vice president of brand marketing for Buena Vista Home Entertainment. "That demand exceeds what theaters can supply."
Among the advantages of direct video for studios is the chance to build profitable franchises. "Consumers love our franchises," said Chapek, referring in part to the growing popularity of video sequels to theatrical releases like "Pocahontas" and "Beauty and the Beast." "They generate synergy, opening up many licensing opportunities."
One video sequel proved especially popular. " 'Lion King II' was the biggest [direct-to-video title] of 1998," said Bill Bryant, vice president of sales, grocery and drug, at Ingram Entertainment, La Vergne, Tenn. " 'Lion King II' did exceptionally well for us in both rentals and sales," said Feinstein.
Further evidence of how popular these character franchises have become were new titles featuring the Addams Family, Richie Rich, Casper, 3 Ninjas, Scooby-Doo and the Olsen twins (a franchise unto themselves), as well as the "Land Before Time" and "All Dogs Go to Heaven" casts.
"Because of the name recognition, these characters are slam-dunks," said Rediske. "It's not like the studios are reinventing the wheel with them."
"Customers are looking for stars and these familiar characters certainly qualify," said Kirk Kirkpatrick, vice president of marketing at WaxWorks Video Works, Owensboro, Ky.
One asset is the mass following these characters attract. "Each franchise has a set audience. There are certain people who are going to buy it," said Dillon.
Studios point out that direct-to-video franchises benefit retailers as well. "We're the first run on these titles," said Chapek. "Retailers get to have a premiere in their own store."
"We appreciate direct-to-video releases because it gives us a chance to showcase new titles for our customers," commented Feinstein.
Some retailers do have reservations about the category, however. "Overall, there's not enough studio support for this product," pointed out Feiock. "First, we don't get enough information on some titles before booking, then we find that the studios haven't made the customers aware. It's really hard to replace theatrical exposure as a tool."
"Franchise series just aren't as strong as the originals," said Dillon. "The studios need to promote more since these titles need an extra push."
There are quality concerns as well. "Direct-to-video releases are very inconsistent," said one industry analyst. " 'Addams Family Reunion,' for instance, was barely watchable. On the other hand, the upcoming 'Baby Huey's Great Easter Adventure' turns out to be highly enjoyable."
Others, though, see no problems. "Consumers have lower expectations for direct-to-video product," said Kirkpatrick. "Therefore, their satisfaction level is higher."
Retailers say these sell-through titles have proved profitable as rentals as well. "The rental market is better than the sell-through on direct-to-video titles because no one has seen them," said Rediske.
"We do very good rental business with this product, but not as much sell-through," said Feiock.
A segment of the direct-to-video category is pitched exclusively to the rental market. New Horizons Home Video, Norcross, Ga., and A-Pix Entertainment, New York, both regularly release sell-through-priced films marketed mainly as cheap rental product.
Examples are New Horizons' "Vulcan," due out in February, and A-Pix' "Treasure of Pirates Point." But there are many other titles released at rental pricing.
Here the field has become so respectable that it now includes "Legionnaire," a $35 million production starring Jean-Claude Van Damme.