A FINISH WITH A FLOURISH

DAN ALAIMO Additional reporting: JOEL ELSON

How do you follow that act? The first half of the year was without doubt the best ever for the video sell-through business. "The Lion King" and "Forrest Gump" set sales precedents that may stand for years, while "The Mask," "Angels in the Outfield," "The Little Rascals," "Little Giants," "Land Before Time II," "The Pagemaster" and "Richie Rich" provided a strong supporting cast. As retailers now begin to plan for the fourth quarter, they are contemplating what the studios will bring out to help them keep the sales momentum going.

Disney has set "Cinderella" to street Oct. 4 and then will release "The Santa Clause" Oct. 25, both backed by major cross-promotional programs. As for other studios, MCA/Universal plans to release "Casper" Oct. 13 at a suggested retail of $22.98. Also, Warner Bros.' "Batman Forever" is expected to be released in the fall, though an exact date has not been announced. Depending on what the studios decide to do with big hits like "Batman Forever," "there are certainly some strong offerings out there," said Clifford Feiock, video coordinator at Nash Finch Co., Minneapolis. "I would say that the opportunities are going to be very, very good." A video executive who oversees the operation of a major chain echoed Feiock's statement by saying, "There's some good theatrical product out there with a lot of ownability to it." Sales of movies released earlier in the year will continue, and other titles to be released in late summer and early fall also will carry over into the fourth quarter, said the retailers. Among these will be "The Swan Princess," "The Pebble and the Penguin" and "A Goofy Movie." The results are not in yet on the theatrical runs of most summer movies, but there are a number of sell-through candidates besides "Casper" and "Batman." These include "Mighty Morphin Power Rangers," "Free Willy 2," "A Little Princess," "Mortal Kombat: The Movie" and "Apollo 13." Meanwhile, FoxVideo is readying "Miracle on 34th Street," to be released Nov. 7 at a $14.98 suggested retail price, while repromoting an enhanced version of the "Star Wars" trilogy. Industry observers speculate that Turner will reprice "Dumb and Dumber" -- the best-selling rental title ever -- for the sell-through market. Following its usual practice, Disney will probably hold "Pocahontas" for a 1996 release, but might announce another significant sell-through title for release later in the fourth quarter, said the observers. Some of the retailers contacted by SN registered disappointment that "Cinderella" would be Disney's lead animated video title in the fourth quarter. The title had previously been released in 1988, when it shipped 7 million units. "I'd like to see 'Pocahontas' come out for the fourth quarter -- that would be my first choice," said Gary Schloss, vice president of grocery and general merchandise at Carr Gottstein Foods, Anchorage, Alaska. " 'Casper' will be great, but it has a limited audience, and a lot of people already have 'Cinderella.' We need something new and exciting," he said. "I don't expect that 'Cinderella' will be as big as 'The Lion King,' " said Glen Fischer, video-photo coordinator at D&W Food Centers, Grand Rapids, Mich. "I'm looking at the same kind of volume we did on 'Snow White.' " But Jan Winn, director of health and beauty care and general merchandise at Big Y Foods, Springfield, Mass., said, "Cinderella" will be "a real home run. We do extremely well with Disney videos at Christmas. The new 'Santa Clause' movie with Tim Allen also will be a home run." D&W also will promote "The Santa Clause," Fischer said. "We are not going huge, but we are certainly going to have it available and see what we can do with it." "The Santa Clause" will outsell "Cinderella," predicted the video executive with a major chain. "Like 'Snow White,' 'Cinderella' is dated product. It's got a narrow demographic, appealing mainly to young girls; 'Santa Clause' is going to have a $19.99 suggested retail price, a wider demographic and will be something the entire family would enjoy. It's got Tim Allen, who is hot -- he's not dated. It is going to be a seasonably applicable product," he said. Disney recently announced that it would reduce the price on "The Santa Clause" from $22.99 to $19.99, a move applauded by the retailers. "That brings the price point down to where it really is going to sell well for us," said Feiock of Nash Finch. Of the titles coming up, "A Goofy Movie" could be a sleeper, said Sharon Stagner, merchandising coordinator at Seaway Food Town, Maumee, Ohio. "It is not a classic that is being rereleased after a moratorium. It is a new video," she said. Without mentioning "Cinderella," Stagner said, "contrary to what Disney likes us to believe, every Disney title is not equal. The ones that have a theatrical release and then go to video for the first time usually do a little bit better than the re-releases." The possibility of selling "Miracle on 34th Street" for under $10 has caught the interest of some retailers. "Giving us the capability of selling at $9.99 is going to turn it into a big sell-through title," said a video executive from a large Midwestern chain. "We are going to treat it like a major sell-through title," he said. "I'm not going to compare it to a title like 'Lion King,' but there will be a lot of people who will want to add it to their library at that price," said Dave Mathis, buyer-coordinator at Super Food Services' General Merchandise Services division, Bellefontaine, Ohio. With a suggested retail of $14.98, "Miracle" will be "certainly worth trying," said Feiock of Nash Finch. Like "The Swan Princess," it was a well-reviewed film that was overlooked because there were so many other family movies out last Christmas. "But because the box office was as bad as it was, you have to be a little careful with it," noted Feiock. With the success of "Forrest Gump" and "The Mask" in the spring, following that of "Speed" last fall, retailers are encouraged at the sell-through prospects of theatrical titles that are not aimed at children. The retailers expect this type of product to continue performing through the fourth quarter and beyond. "Years ago, the only thing you could sell was kids' product. Today, the market has matured and the family-oriented action and comedy movies have done very well for us and they continue to be a growing percentage of our total business," said the video executive from a large Midwestern chain. "We did fantastic with 'Gump,' " said Steve Gretzinger, video coordinator at Angeli Foods Co., Iron River, Mich. "People now understand that they can look for a decent price on videos in a supermarket," he said. "I'd like to see some adult action or comedy titles released for sell-through in the fourth quarter. For example, 'Die Hard With a Vengeance' would probably do real well and widen the market for sell-through," he said. "We sold 'Forrest Gump' and we were very successful with it," said Winn of Big Y. "We'll look for some titles for adults like that, but we'll be very careful about the ratings since supermarkets are so family oriented." "Forrest Gump" itself will continue to do well through the fourth quarter, if stores can find the space for it, said Feiock of Nash Finch. " 'Gump' is one that we definitely should hang in there with because it is going to continue to be strong. It seems like every time they do some more advertising on it, it gets another shot in the arm," he said. Some retailers said that although the sell-through of movies geared for adults is getting stronger, children's products will continue to dominate video sales. "They are slowly picking up, but I don't think they are ever going to overtake family and children's videos. They always are the best," said Stagner of Seaway Food Town. "Your children's classics will continue to be No. 1, with movies such as 'Forrest Gump' following closely behind," said Mathis of Super Food Services. "Your biggest hits have been the 'Aladdins,' 'Lion Kings' and 'Snow Whites,' " said Dan Black, buyer at Raley's Supermarkets, West Sacramento, Calif. " 'Forrest Gump' did extremely well, but it was probably the only title that came close to doing what the Disney animated films did," he said. Although video sales have been spreading out through the year, the fourth quarter is still the most important time on the retailers' calendar. "The fourth quarter is very important to our sell-through business since it accounts for about 60% of our total sell-through volume," said Jim Key, nonfood direct-store buyer at Community Cash Stores, Spartanburg, S.C. More video sales are being made in supermarkets, he noted. "It's working good. As pricing becomes more competitive in the supermarket, people are more inclined to buy videos there," he said. "You've got to stay aggressive," said the video executive from the major Midwestern chain. During the first three quarters, the retailer averages under 25% per quarter of its total sell-through volume. "But during the Christmas season, it jumps to 35%, and we are projecting it to go to 38% this year," he said. "We need to do whatever we can come up with to continue pushing sell-through," said Fischer of D&W. "Although our sell-through is moving to a year-round business, the fourth quarter is still strong because of gift-giving," said Winn of Big Y. "In the fourth quarter, what works best is giving the products very high visibility and strong advertising. With a hit title like 'Cinderella,' if you put it out there in front of the customer, it will just go away." Sell-through is becoming more of a year-round business for Carr Gottstein, said Schloss. "But it is stronger in the fourth quarter when it increases by another 30% to 40%," he said. The sell-through of video is not the problem, but the margin retailers make on the big titles is, said Black of Raley's. "We've had a good three or four years of solid increases. Now we just have to figure out how to get the profits up. It doesn't do anybody any good just to sell something slightly above cost, at cost or below cost," he said. Sales of secondary video titles at higher margins do not help significantly, he said. "You are never going to make up for the quantity that you are selling at the reduced price when you run a mega hit," said Black. Raley's stopped selling video games because the retailer wasn't making money on them, he said. "I think retailers are going to start looking at the major video hits the same way. If the studios don't start building some kind of profit margin into them, it's going to get to the point where it's not going to be worth it," said Black.

4th Quarter Lineup

Although studios have yet to announce their timetables for the release of some key titles, the fourth quarter of 1995 is shaping up as another sell-through blockbuster.

Anticipated Releases

"The Little Princess" Warner Sept. 19 $24.94

"Cinderella" Buena Vista Oct. 4 $26.99

"Casper" MCA/Universal Oct. 13 $22.98

"The Santa Clause" Buena Vista Oct. 25 $19.99

"Miracle on 34th Street" FoxVideo Nov. 7 $14.98

"Mighty Morphin Power Rangers" FoxVideo Nov. 21 price NA

Anticipated Releases

"Batman Forever" Warner

"Free Willy 2" Warner

"Mortal Kombat: The Movie" New Line