KIDS' DVD MARKET CALLED NOT READY FOR PRIME TIME

DAN ALAIMO / Additional reporting: JOEL ELSON

While an increasing number of titles are available on the DVD format, and the players are selling at a rapid clip, the market for children's DVD product is still in the earliest growth stages.

The DVD Entertainment Group, Los Angeles, estimates that there will be 12 million DVD hardware units in homes by the end of the year, more than 10% of U.S. households. By then, children's software will be more in demand, but now the most popular titles continue to be the action-adventure titles most desired by the young males in the early-adopter demographic.

"Children's DVD is in its infancy. It hasn't quite popped yet, but it will as the DVD hardware increases its penetration," said Bill Bryant, vice president for sales, grocery and drug at Ingram Entertainment, La Vergne, Tenn. "At this point, the bulk of the DVD audience is into the more-mature, live-action product. With the release of the first Disney classics and all the other feature children's titles coming out with DVD day and date, that is going to help to solidify the children's DVD market. It is starting to rival VHS in the mass merchants, but it is not quite there yet in the supermarkets," he said.

Retailers polled by SN confirmed this assessment.

"We are just getting into DVD, but only with adult titles," said Karen Welch, video buyer at Clyde Evans Markets, Lima, Ohio. "As a grocery store, we compete for DVD with a lot of discounters with stores close to us. But this market will definitely grow as more people acquire a DVD player," she said.

"We don't carry children's videos on DVD for sell-through because of the tough competition from the mass merchandisers and Blockbuster. We have a few as rentals," said Bob Gettner, video buyer/coordinator at B&R Stores, Lincoln, Neb.

"We have not had much success with children's videos on DVD," said Darlene Kiefer, services coordinator for Seaway Food Town, Maumee, Ohio. "We've tried Barney on DVD before Christmas and didn't sell many. We also tried 'Titanic' on DVD and didn't sell many of those either. I think it may be a little too early for DVD in our market."

Theft is another issue for Seaway Food Town, which uses the Checkpoint security system. "We have told the studios repeatedly we cannot carry DVD as sell-through until the packaging contains sourced-tagged Checkpoint security labels inside the packaging," she said.

"Children's movies less than an hour long on DVD are not moving," said Laura Fisher, video coordinator for Martin's Super Markets, South Bend, Ind. "People do not want to pay $20 for a 30-minute cartoon. I have not seen any children's movies on DVD priced under $20. Studios need to look at their pricing. If they want consumers to pay $20, they had better put more than one movie on it," she said.

"We are right at the beginning" of selling children's videos on DVD, said Dan Capone, vice president of marketing and development at Family Entertainment, Warner Home Video, Burbank, Calif. "We have released some product on DVD. A few have done very well. All of them have met our expectations or exceeded them," he said.

"I see children's DVD growing, but I believe that the real growth in DVD is going to be in the adult's market. Hopefully, in the coming fourth quarter we'll start getting more and more families and more and more kids. We will continue to focus on family DVD and we know we are going to grow that market," Capone said.

Early indications from the Feb. 1 release of "Tarzan" indicate that the DVD version is selling very well, said Dennis Maguire, senior vice president for sales at Buena Vista Home Entertainment, Burbank, Calif. "Our initial results from the 'Tarzan' release show that it will be the biggest-selling title compared to all of those in 1999 and certainly the biggest-selling title so far of 2000. On DVD, it will be the biggest family film ever," Maguire said.

"At first we concentrated on the big action hits to align ourselves with the demographic that was buying first DVD players," said Suzanne White, executive director of marketing for Columbia TriStar Home Video, Culver City, Calif. "Now, as these DVDs are moving into more homes, consumers are expanding their libraries with children's product, and the studios are making more and more available," she said. Added-value features on DVDs, such as games and other interactive elements, make them all the more attractive to the family audience, she said.

"DVD has clearly moved into the mainstream and should be offered as a viable selection, depending on what has been developed and can be supported within the overall strategy," said Dick Longwell, senior vice president of sales for Universal Music & Video Distribution, Universal City, Calif.

With the strong sales of DVD players, "we are really reaching a broad-based consumer," said Kelly Sooter, head of domestic home video at DreamWorks Home Entertainment, Glendale, Calif. "You are seeing the studios launching family titles day and date on VHS and DVD and seeing great success. That has reinforced our initiatives to continue to launch family product day and date on DVD and continue to evaluate our overall marketing program in terms of our product mix and how we talk to the consumer," she said.

"To date, we've only introduced one DVD children's title and that was the Rugrats movie," said Michael Arkin, senior vice president for marketing at Paramount Home Entertainment, Hollywood. "The technology is still in just a fraction of the households. So far, it has been a male-dominated success. The owner of DVDs is typically a man, 35 plus. It doesn't feel like the best medium in which to introduce children's product, although we did very well with Rugrats."