2002: A DVD ODYSSEY

LIZA CASABONA

The first half of 2002 looks like it will show unprecedented growth in the sale and rental of DVD in the home entertainment category.

"It looks like it's going to be a very strong period for DVD rentals and sales. And we'll probably see the beginning of a decrease in activity on VHS," said Bill Glaseman, video specialist, Bashas' Markets, Chandler, Ariz.

Bob Gettner, video buyer and coordinator, B&R Stores, Lincoln, Neb., agreed.

"I think DVD should be good no matter what titles are out there," he said. "I've got a hunch that during the Christmas holiday season there will be more DVD players purchased for Christmas presents. The DVD end of it will probably be very strong. VHS is going to be somewhat more title-dependent."

Retail buyers and specialists agree that the first half of 2002 will be big for DVD, irrespective of the titles that the studios will be releasing. The switch seems imminent for mainstream theatrical titles. But children's titles won't necessarily follow the same trends, although there are a number of children's DVD titles worth notice.

"While we are big supporters of DVD, the children's market for VHS is still where the action is," said Martin Blythe, vice president of publicity, Paramount Home Entertainment, Hollywood, Calif. Paramount's big releases for the first half will include a number of their Nickelodeon videos aimed at children.

These include tapes of the popular series "Blue's Clues" and "Little Bill" on Jan. 29 and "Dora the Explorer" on Feb. 5.

A new "Rugrats" seasonal title will also be released for Easter of next year. Because of the inclusion of more than one religion in the "Rugrats" cast of characters, it presents a unique opportunity, said Blythe.

"It's a great way to cover all the seasonal and religious holidays," he said.

Later in the year, not necessarily tied to the Easter release, he added, there will be a big "Rugrats" DVD promotional push. A large number of the series' DVDs will be available.

"Blue's Clues" and "Little Bear" have a suggested retail price of $9.95, and "Rugrats" and "Dora" will retail at $12.95.

In looking at next year's roster of titles, Blythe said he would zero in on the Nickelodeon titles as an important element for supermarket video departments.

"That is such an easy sell. You get moms who have their mix of impulse purchasing and the nag factor of kids and the low price point," he explained.

Laura Fisher, video rental supervisor, Martin's Supermarkets, South Bend, Ind., anticipates some big children's titles in 2002 as well.

"'Monsters, Inc.' will come out next year -- that will be big; 'Atlantis', that will be coming out next year. That will also be really big," she said.

Disney's "Atlantis" is slated for a Jan. 29 release date on both VHS and DVD. Disney will also be re-releasing a few classic children's titles on DVD and VHS. "Peter Pan" will be available on Feb. 12 in both formats and "Newsies," a musical, will be available on VHS and, for the first time, on DVD on Jan. 15. "Cinderella 2," a direct-to-video title, will be available in both formats on Feb. 26.

Columbia TriStar is also releasing a Cinderella movie in the first half. Its "Rodgers & Hammerstein's Cinderella," the 1965 TV version set to music, will be released on DVD and videocassette on Jan. 2.

Other classic children's titles slated for re-release or new release on DVD include "Sesame Street: Follow That Bird" and "Watership Down" from Warner Bright Kids Video collection on Feb. 5; The Black Stallion" and "The Black Stallion Returns" from MGM Home Entertainment on Feb. 5 in a two-pack DVD set, and a new Bob the Builder video, "The Big Game," on Jan. 8.

But regardless of the appeal that still surrounds children's video and, increasingly, DVD, the big news of 2002 will most likely be the growth in DVD rental popularity, retailers said.

"I think that if you don't follow new formats, like the DVD and the Playstation 2, then you're basically going to be out of business. Just doing the VHS and the older games isn't getting it anymore," Fisher said. "You really have to update your departments if you want to continue to be in the rental business."

Chris Roberts, vice president, sales, Rentrak, a video and DVD distributor in Portland, Ore., thinks this switch is connected to price changes in the hardware that is available. In some cases DVD players now retail for between $80 and $100, a price he thinks will increase DVD penetration of the rental market.

"I think you're going to see a shift in the hardware this holiday season, simply because of its price. That is going to drive consumers into supermarkets because they're there, and it is going to drive them to rent. The first two or three years of DVD you saw a huge penetration of sell-through, but more and more retailers are seeing the rental portion of the DVD business grow substantially."

Why the switch? Roberts said simply because consumers only need to see movies so many times. With a decrease in hardware price and more availability of rental titles, consumers no longer need to purchase DVDs for viewing.

However, Roberts cautioned many retailers will be watching the pricing of both VHS- and DVD-formatted titles. Concerns over VHS rental pricing and the continued low price of DVD could have a strong effect on next year's outlook.

"Retailers, both supermarkets and video retailers, are really keeping an eye on the price of DVD," he said. "Everyone is wondering where the price is going. Is it going to stay at a sell-through price or will it go to a rental price model? That's the $64,000 question, 'what's going to happen?"'

Roberts added that the situation alone could have a dramatic effect on the industry. Currently DVD rental is very profitable, carrying a huge return on investment. Roberts estimates that DVD titles can be brought in for approximately $18 to $20, and generate between $60 and $100 in rental revenue for retailers. Price changes could have a profound affect on how retailers view DVD.

For VHS and to a lesser degree for DVD, hit titles will still be important sales drivers, retailers told SN.

"'The Fast and the Furious' is coming out in January. That will probably be the best release of January," Glaseman noted.

Roberts agreed, pointing to "American Pie 2" and "The Fast and the Furious" with release dates in the first quarter.

"You have great title selection coming up in the first quarter," he said.

"The Fast and the Furious" has a street date of Jan. 2 from Universal Studios Home Video. "American Pie 2" will street on Jan. 15.

Roberts added that he thinks action/adventure and comedy will still be the most popular releases. An observation that could be supported by some of the releases slated for the first half.

Paramount will release all three installments of Eddie Murphy's "Beverly Hills Cop" series on Jan. 29 for the first time on DVD. Each film will be priced individually at $24.99 for sell-through. "Harlem Nights" and "Vampire in Brooklyn," two other Murphy titles, will also be re-released but Blythe predicts the "Beverly Hills Cop" movies will be the big seller.

Disney's "Bubble Boy" is due to be released on DVD and VHS on Jan. 15, along with a 20th anniversary edition of "Tron" on both formats.

In the comedy category, Paramount releases "Rat Race" priced for sell-through on DVD at $29.99 and for rental on VHS on Jan. 22.

Lions Gate Entertainment has set a pre-book date for "O" of Jan. 28 for VHS and Jan. 21 for DVD. Both formats are due to arrive in stores on Feb. 19 and will be priced for rental on VHS and $24.99 on DVD.

Columbia TriStar has a family-oriented lineup slated for next year's releases. "Tortilla Soup," a remake of Ang Lee's "Eat, Drink, Man, Woman," hits stores on Jan. 15 on DVD and VHS.

Also on Jan. 22 Paramount releases "Rat Race" priced for sell-through on DVD at $29.99 and for rental on VHS.

"Mad Max" will be released as a special DVD edition on Jan. 4 from MGM Home Entertainment.