With some top titles in the offing, the first half of 2000's sell-through season promises to make up for much of the ground lost because of the fourth quarter's lean selection.
"Tarzan" has already been announced for a Feb. 1 release, but before the weather gets warm, industry observers expect "Star Wars: Episode I: The Phantom Menace," "Pokemon: The First Movie" and perhaps even "Toy Story 2" to be in stores. "The Sixth Sense," a movie approaching 20 weeks and $300 million in a remarkable theatrical run, may also come out if and when people stop going to see it in theaters.
All were huge, record-setting hits at the box office and are highly collectible and repeatable, which, as all retailers know, is the formula for video sales success.
"It's a very strong lineup," said Clifford Feiock, video coordinator at Nash Finch Co., Minneapolis. "It should be a good opportunity for the retail stores both on the sell-through and rental sides of the business. Certainly 'Star Wars' is going to be one of the best, and 'Tarzan' also because of the Disney support and reputation."
Many video executives contacted admitted to some bafflement about the "Pokemon" phenomenon. "It's a mystery to me, but it certainly has taken over," said Feiock. With all the small Pokemon merchandise on the market, there might be some tie-in possibilities in the future. "If it's still as hot as it is right now, I would think there would be cross-merchandising opportunities once the movie comes to video," he said.
There also will be some strong catalog promotions next year and "we are going to try and tie in with as many of them as we can," said Feiock. It hasn't been possible for Nash Finch to use all the Warner programs in the past year, "but where it makes sense, we are certainly going to participate or at least make them available to our stores and let them make the decision," he said.
DVD is making optimists out of many retailers. "I am hopeful that it is really going to take off. It seems to be doing just that already," said Feiock. "In many of our stores, we've been in DVD for up to a year now, and it has been real slow. We've added more stores now in the last two or three months, and we will be adding some more between now and the end of the year. But the stores where DVD has been in nine months or so are really starting to take off. It is definitely getting better, and we haven't been spending a lot of money on reinvestment there, just picking up the best of the new releases as they are released. Certainly there is a great deal of opportunity there," he said.
"'Star Wars' will probably be the big one for the first half, and I wouldn't be surprised if 'Pokemon' didn't do a sensational job," said Bill Glaseman, video specialist at Bashas' Markets, Chandler, Ariz. "And 'Tarzan' was a big Disney title, so I expect it to do well," he said.
Overall, Glaseman thinks this could be one of the better first halves in recent memory for sell-through. "It is a real possibility, but it's very difficult to judge. You expect something to be big and then it bombs, and you expect other things to do so-so and they become great. But from the titles and the box office coming out, I would say that the first half has good potential," he said.
Glaseman also is pleased with DVD's progress. "It's coming on much, much stronger. I'm positive it will be much stronger in the first half of next year," he said.
Distributors are looking forward to early next year, too. "We are pleased with the releases that we believe will be announced for the first half of the year," said Bill Bryant, vice president for sales, grocery and drug at Ingram Entertainment, La Vergne, Tenn. "And we are hoping that the actual street dates will be spread out where there will be a major release every month. Ingram's supermarket customers depend on primary titles to pull through ancillary titles due to their draw into the video section. We are expecting there to be a nice flow of real strong product," he said.
Not all supermarkets are participating in catalog programs, but the ones that are see nice bumps in sales with healthy margins. "More are getting involved in catalog product, which is good for retail margins and good for impulse sales as well. When it's at the $9.98 suggested retail price, it's a perfect fit for supermarkets," said Bryant.
"It's not a majority, but several of the major supermarket retailers have joined in on these major studio sell-through continuity programs and have had good success at retail when the product is placed outside the rental departments in the main selling areas of the store. When the product is placed in the main selling area of the store, the sales typically triple because of the amount of impressions from the store traffic. In addition, more stores are adding catalog video sections because of the increased margin, as well as the impulse purchase potential of the $9.98 and $14.95 SRP product," he said.
To illustrate DVD's growth, Bryant noted that in 1999 the distributor had one corrugated multi-studio prepack of DVD product, and in 2000 Ingram will have four. This shows that DVD will soon be a sell-through item for supermarkets and not just a rental product, he said.
"We are expecting DVD-rental sections to perform very well in supermarkets in the first quarter because of the tremendous number of players that are going to be received as holiday gifts. We really think this fourth quarter is going to be huge in terms of DVD hardware purchases by consumers, which should create tremendous demand," he said.
"Tarzan" is likely to be the strongest title of the first half for C&K Markets, Brookings, Ore., said Larry Hage, division supervisor/video buyer. "We do well selling that kind of title, but I don't know how monster deep I would go on rental, because the rental rage for children's stuff evaporates really fast," he said.
"Star Wars" also will sell well for C&K, he said. "Anytime something is highly successful at the box office, you have to assume it is also going to be highly successful at the next level," said Hage.
"Pokemon" is still too new for Hage to comment on. "The youth is driving that market and if they decide they want to make it a success, we'll get on board and ride it," he said. But Hage is concerned that there will not be enough solid titles beyond the big hits everyone is talking about. "What else is there after you get past the big titles?" he asked. "I don't think we are getting enough good movies coming in on a monthly basis to really drive the video business the way it needs to be driven. This is a need-based business and people aren't feeling a real strong need to see some of the stuff that is coming out," he said.
The roster of sell-through titles is strong in the first half, acknowledged Denise Darnell, video supervisor for Southeast Foods, Monroe, La. "We've never been super big on sell-through product because the mass merchants have it at such cheap prices. But we do bring the pieces in and sell a good amount, and we try to do as best we can. We love it when good product comes out," she said.
"Tarzan" will probably outsell "Star Wars" at Southeast Foods, she said. "We have more collectors of the animated product than of movies like 'Star Wars,"' she said. "Disney has really put a lot of emphasis on 'Tarzan,' so it is going to be a good title for us," she said.
All these big titles will also rent well for the retailer. "On the big sell-through titles, we always do very well for rental. I think that 'Star Wars' will actually be a big renter for us. Most of our collectors like the animated titles and the children's movies more so than 'Star Wars,' 'Star Trek' and all of those. So I think that we will do better with 'Tarzan' for sell-through, but we will do better on the rental with 'Star Wars,"' Darnell said.
Catalog is not a priority at Southeast, she said. "We'll primarily bring in just a few pieces here and there of titles we know our customers want to buy and then do special orders," he said.
DVD's time is near, Darnell confirmed. "We've been gearing up for it all year long, expecting that a lot of people will get machines for Christmas. So we hope that the numbers will come through like they are predicting and that we will have a really successful first quarter with DVD. We have really seen some improvement in our DVD rentals just over the last couple of months compared to the first of the year when we first started getting them. So I think that the rush is on already," she said.