Video revenues are down in most chains through the first half of the year, according to some reports, but retailers can look forward to seeing a lot of "green" in the second half. That's green cash generated by a couple of green characters, namely The Grinch and Shrek.
Retailers are banking on those titles and other hits to help ease the pain of the first half of the year.
"April was a really, really bad month, the worst we've seen in years and years," said Alex Cusick, director of research at the Video Software Dealers Association, Encino, Calif. He said the nationwide bout of warm weather during the month contributed to sluggish video revenues in an environment already chilled by a lack of hot releases.
The VSDA calculated that through June 3, VHS rental revenues were $2.9 billion, down 13.8 percent from a year ago at about the same time. The increase in DVD rentals helped compensate, however, as revenues for that movie medium soared 179%, to $504 million, in the same time frame. Total rental revenue for both DVD and VHS was $3.4 billion through June 3, a decline of 4% from a year ago.
The release of such blockbuster hits as "The Sixth Sense" and "The Phantom Menace" in the first half of last year make comparisons especially difficult for retailers this year, he said. The total box-office draw of movies released on video this past April was $514 million, he said, compared with $1.2 billion in April of a year ago.
Bill Bryant, vice president of sales, grocery and drug, Ingram Entertainment, La Vergne, Tenn., said there are about 25% fewer units of hit video titles on the market this year, in terms of studio "goals," or selling targets, than there were in 2000.
"There were more sell-through titles available in the first half of 2000, so revenues are down in most chains," he said.
Comparing the first five months of last year with the first five months of this year, Bryant found that the top video titles had goals of 61.5 million units in 2000, vs. goals of 47.2 million units in 2001.
"That will absolutely flip-flop in the fourth quarter," he said, "because there's just a tremendous fourth quarter coming."
He said the expected fourth-quarter release of movies like "Shrek," "The Grinch," "Pearl Harbor," "Jurassic Park III" and "The Mummy Returns" should be enough to compensate for the slow start retailers have seen in the first half of the year.
It hasn't all been bad news for retailers, however. One Midwestern supermarket operator who asked not to be identified said his chain was having great success testing a sell-through program in about 20 stores. The company is placing freestanding displays of product at various places throughout the store rather than just near the video counter.
"Anywhere we've got a four-by-two [foot] space, we're putting them, and they're moving," he said, noting that the program was working especially well for lower-priced tapes.
Those results seem to be the exception in the industry, however.
"We've heard chains are down 20% to 25% on the sell-through side," said Bryant.
He said rental revenues at some chains, however, have been solid. He said some retailers report that rental revenues are up about 15% over last year.
