CATALOG SELL-THROUGH TO GET NEW FOCUS

DAN ALAIMO

SANTA MONICA, Calif. -- The sell-through of older "catalog" movies on videocassettes will be a major opportunity for supermarkets in the year ahead, said Richard Cohen, president of MGM/UA Home Entertainment here. "We want to be much more aggressive with our catalog than we have ever been before," Cohen told SN in an exclusive interview. "We are in the process of putting together different kinds of programs now that will make it more interesting for supermarkets, among other channels, to sell our films." The programs will include price promotions and themed events that spotlight more specific areas of the MGM/UA catalog, he said. "Our catalog is very broad, so we want to segment it more aggressively than we have before and refocus it as we have with the MGM Family Classics, for example," he said. "There also are a lot of great United Artists titles that have not received nearly the amount of focus that they merit. So in being much more aggressive in the sell-through and repromote of our catalog, that will have a direct impact on supermarkets," he said. The number of cross-promotions with packaged goods and other companies will also increase and become more refined and sophisticated, said Cohen. A successful tie-in the studio ran in the last year was a promotion with Kleenex that highlighted the fact that it was the 70th anniversary of both the packaged goods company and Metro Goldwyn Mayer. Among the titles involved were "The Wizard of Oz," "Singin' in the Rain," "West Side Story," "Moonstruck," "The Cutting Edge" and "Benny and Joon." A special merchandiser was created that included both Kleenex products and the MGM/UA movies. As strong as that promotion was, there was room for improvement, especially in terms of execution and follow-through. "It wasn't as good as it should have been and it will be better next time," noted Cohen. Supermarkets have come a long way in their ability to move videos in the two-plus years since Cohen left his position of executive vice president of Disney's Buena Vista Home Video, Burbank, Calif., for a job overseas. He took the president's job at MGM/UA Home Entertainment a year ago. "The supermarket sector has become dramatically more aggressive and more active in video over the last several years than it was before. Whereas a few years ago, it was an issue just to convince people in the supermarket trade that video was an interesting product, that no longer needs to be done. They know it is an interesting product, provided that it is the right original films, packaged and marketed correctly," he said. "So they are doing a pretty good job, by and large. Now it is up to everybody in the business, and MGM/UA in particular, to deliver the goods," said Cohen. Cohen attributes MGM/UA's success during the fourth quarter -- despite not having a major sell-through hit to promote -- to developing flexible programs that responded to retailers' needs. "The core of our strategy is very elementary. It is to go talk to the customers and find out what they want, and then, as near as possible, deliver it. That's what we did for the fourth quarter, and the result was not a big surprise. If the customers tell you what they want and you give it to them, they will buy it," he said. This practice will continue as video enters what may be its best-ever first quarter for sell-through. "We have a very realistic attitude about our catalog product from the commercial point of view of supermarkets and other retailers," Cohen said. "It's no big secret that there is very little net margin earned by big, front-line video titles because of the nature of the price competition that takes place around them." So MGM/UA suggests that retailers try to make a second videocassette sale along with titles like "Snow White and the Seven Dwarfs," "Jurassic Park" and "The Flintstones." "You've got buyers in the store with their wallets open and ready to buy video. If you can get a second purchase and earn full margin on that, then we want to be that second purchase. We will work with the buyers to accommodate exactly that. We will make it very attractive for them, and therefore for us," said Cohen. "We've set it as one of our company missions to be the most sensitive and the most flexible of all the suppliers regarding customer needs," he said. Another major focus for MGM/ UA in the year ahead will be developing interactive multimedia products based on its movie titles. This is a new business, and while its direction is not entirely clear yet, it is certain that this will be a big part of entertainment software sales in the future, Cohen noted. "Nobody knows exactly what form is going to prevail, but there is going to be, and already is, a very active consumer base for these products. Supermarket retailers should stay on top of it and get in much sooner in the growth curve than they did with video," he said. MGM/UA is already co-marketing games and movies, as it has with "Blown Away." Sales of compact disc read-only memory products are increasing rapidly, but they still have a long way to go. "Realistically, supermarkets need to be cautious, but not too cautious," he said. The main issue for supermarkets regarding these products is the same as with other new items: justifying the space commitment for them. "They have a finite amount of space, and there are many other people with many other products that want that space. There will almost certainly be a time when it will justify the space, but I don't know if that time is here -- I wish it were. In the meantime, they should be very, very attuned to the development of these new media and new technologies for that moment when they decide they want to be in that business," he said. One day, movies will be available on five-inch compact discs and that will be good news for the sell-through business in supermarkets, said Cohen. "One of the potential advantages is that the manufacturing costs will be less than videocassettes, and therefore the retail price can be less. They also will take up less space than video. So I think that it is potentially great news for supermarkets," he said.