The growing direct-to-video phenomenon offers the industry opportunities to build profitable franchises exclusively at retail.
Many direct-to-video titles, like the Moonbeam Entertainment line distributed by Paramount Home Video, Hollywood, Calif., target the rental market. But the titles released at sell-through prices, like Disney's "Return of Jafar" and MCA/Universal's "Land Before Time" series, have bigger advertising support, which results in greater consumer awareness.
These titles have done particularly well in supermarkets, retailers told SN. "We actually do really well with those," said Julie Macey, video department manager at Macey's, Sandy, Utah.
"The studios probably are trying to push it more. Most of them offer a guaranteed sell. So if it is not selling, they will come back and get them. But most do sell," she explained.
The big success of Disney's "Return to Jafar," which sold 10 million copies, according to a Disney spokesman, awakened the video industry to the potential of the direct-to-video children's market, retailers and industry observers said.
As the video market has been increasingly recognized as Hollywood's biggest profit center, the studios also have been boosting their commitment to full-length, direct-to-video features -- titles that have had no screening prior to the home video release.
Retailers like these titles and sometimes give them enhanced merchandising and promotional support because they get them first, said industry observers.
"Direct-to-video sell-throughs give retailers the unique ability to offer something that you couldn't see on television or in the movies," said Kirk Kirkpatrick, vice president of sales at Waxworks Video Works, Owensboro, Ky.
"The fact that it is unique or exclusive to home video is something very different. Several years ago it was virtually unheard of. Nobody thought it [a major feature] wouldn't have to have a theatrical run," he added.
So far this year there are two prominent direct-to-video titles for the sell-through market: "The Land Before Time III: The Time of the Great Giving" from MCA/Universal, which was released Dec. 13 but is expected to sell into the first quarter, and the third title in the Aladdin line, "Aladdin and the King of Thieves," which Disney will release later this year.
The new Aladdin title is expected to do especially well because it features the return of Robin Williams as the voice of the genie.
There are many direct-to-video titles for the rental market. For example, Paramount will release the third title in the Moonbeam Entertainment series, "Josh Kirby . . . Time Warrior!" on Feb. 13. It will be titled "Trapped on Toyworld." MCA/Universal released "Beastmaster III: The Eye of Braxus" Jan. 3, and has two more direct-to-video titles planned for later in the year: "Darkman III: Die Darkman Die!" and "Tremors II: Aftershock." Release dates on the last two have not been announced yet.
Recalling the successful direct-to-video releases of "Return of Jafar" and "Land Before Time II," Ronnie Leach, department manager at Scolari's Food & Drug Co., Sparks, Nev., credits the chain's direct-to-video sales so far to their linkage to an original box office hit.
She contends that there is a market for direct-to-video features. Children's box office hits, such as "Indian in the Cupboard," would do especially well in a direct-to-video sequel, she said.
Arin Wolfson, general manager at Alexander & Associates, New York, who also said "Return of Jafar" was the big breakthrough, expects to see more direct-to-video feature releases.
He mentioned the success of MCA spinoffs of "Land Before Time," which did well in theaters. It was followed up last year with the direct-to-video "Land Before Time II." "Its success," said Wolfson, "wasn't in the neighborhood of 'Return of Jafar,' but then 'Land Before Time' was no 'Aladdin' at the box office."
However, said Wolfson, "considering it was direct-to-video, it was higher profile and they built a franchise on it. And now they have 'Land Before Time III.' "
The advantage for studios is that it enables them to build off of a previous success or franchise, Wolfson pointed out. "It is easier to come up with a sequel to a successful box office feature than create a new feature out of nothing," he said.
"Also," said Wolfson, "the parent knows something about the direct-to-video release if they've seen the original. They know the quality and the content.
"It is like extending a successful brand," said Wolfson. "It is easier to create a cool ranch Dorito off of a regular Dorito. That is an advantage and it builds on awareness," he added.
The softening of the rental market also may further the growth of more direct-to-video titles priced for sell-through, Wolfson speculated. Sell-through sales increased 19% in 1995, according to Alexander & Associates. "Direct-to-video features are going to be released as sell-through," Wolfson said.
Kirkpatrick of Waxworks agrees that direct-to-video has an advantage if it is based on a previous property that was popularly received.
The direct-to-video market has increased, "and the easiest way to explain it is that if there is a character or franchise already developed, it makes it easier. It is already sold," said Kirkpatrick, who mentioned "Aladdin" as a good example.
" 'Aladdin' was already at the box office, rental and sell-through. The sequel 'Return of Jafar' never went to the theater. It never was on television. It wasn't advertised in any way except to say it was available in video stores. And it did outstandingly well."
Another direct-to-video success, said Kirkpatrick, was a follow-up to Steven Spielberg's "An American Tale," featuring Feivel the mouse. A successful box office sequel was made. But the third film in the series went straight to video, he said.
"When you have a franchise like that, it is silly not to take advantage of it, especially for kids that have just seen the original and recognize the Genie or the Power Rangers."
He called direct-to-video a "real niche that makes the video renting or purchasing experience a little different."
Kirkpatrick said retailers should take advantage of opportunities in direct-to-video by merchandising and promoting releases to make customers aware that these videos are only available at retail.
Sherry Marino, video department manager at Howard's Town and Country, Parsons, Kan., plans to both sell and rent upcoming direct-to-video Disney releases.
Disney, she said, sends a poster pack every month with point-of-purchase materials.
To further promote such releases, "we'll put up posters and play the videos in-store." The title box is placed on top of the VCR so shoppers know what is being played," she explained.
The retailer also merchandises Moonbeam releases distributed by Paramount, Marino said.
Leach of Scolari's places direct-to-video releases in "key locations where customers can see them right away."
In terms of sales, "they do all right," she said, but pointed out that customers still first gravitate to the box office hits.
To promote its children's videos, Macey's has designated Monday night as "family night" and offers rentals for 50 cents. "We do really well," said Macey.
"We have a special section and it is family-oriented. Most titles are rated G and some are PG," she said. That's where customers also could find the direct-to-video releases.
She added that the chain does more rental than sell-through business, except for Christmastime, when sell-through gets more attention.
For competitive reasons, Howard's Town and Country has made a concerted effort to keep the price of its children's videos low, said Marino. "We don't try to make a whole lot off of them. We try to compete with Wal-Mart and Kmart. For instance, a video that costs $12.45, we might sell it at $12.99 or $12.95."
She said the department's profits are made from selling multiple copies of big box office features.
Meanwhile some retailers continue to evaluate the performance of the direct-to-video segment and are yet unsure how much attention it deserves.
Ken Lesney, video merchandiser at Martin's Super Markets, South Bend, Ind., said he is looking at its successes "on a per-store basis."
"We are seeing mixed results, and at this point in time we are not planning on doing anything any differently until we start seeing better results," he said.
Randall King, nonfood buyer at Byrd Food Stores, Burlington, N.C., which usually offers sell-through videos during the holiday season, said the chain didn't offer many videos this year. For the Christmas season, the chain only merchandised some Winnie the Pooh titles for $9.99 and $12.99.