RETAILER URGES A SECOND TAKE ON SALES OF USED RENTAL FILMS

NEW YORK -- Jack Eugster, chairman and chief executive officer of Musicland Stores Corp., Minneapolis, used the occasion of his induction into the Video Hall of Fame to urge the video industry to exercise greater caution in the promulgation of copy-depth programs for the rental market.While supplying rental retailers with more copies of the hot new releases, the programs also are resulting in a dramatic

NEW YORK -- Jack Eugster, chairman and chief executive officer of Musicland Stores Corp., Minneapolis, used the occasion of his induction into the Video Hall of Fame to urge the video industry to exercise greater caution in the promulgation of copy-depth programs for the rental market.

While supplying rental retailers with more copies of the hot new releases, the programs also are resulting in a dramatic increase in the number of used tapes sold after the rental activity slows down, he said.

This is having a negative effect on retailers who sell the movies when they are later released at sell-through pricing.

"This is a very good business and it is important to all of our futures," Eugster told the gathering of studio and video executives here Dec. 8. "Together, all of us need to protect and nurture the sale of movies. Revenue sharing has revitalized the rental aspect of movie making. But care must be given to the impact on the sale of sell-through products from the large number of used videos that are flooding the market today."

Musicland operates more than 1,400 stores under the Sam Goody, Suncoast Motion Picture Co., Media Play and On Cue banners, and has been in the video sell-through business since 1985, Eugster said.

Eugster also urged greater copy protection for movies on television as digital broadcasting becomes a reality. "The broadcast of a movie on TV always seems to stimulate video sales in our stores. But without the full use of copy-guard techniques, digitally broadcast movies will be copied into the market without ever actually being sold," he said.

Meanwhile, DVD can provide a significant boost to the video industry, he added. "DVD is here and it is the best new entertainment configuration since the audio CD. Courageous leadership has brought this forward and we are just really pleased as a company about how all the studios are getting behind it and providing support for DVD," said Eugster.

Other inductees into the Video Hall of Fame, which was sponsored by the trade publication Video Business, New York, were Sheryl Leach, creator of Barney the dinosaur and founder of Lyrick Studios, Richardson, Texas, and "Titanic" filmmaker James Cameron of Lightstorm Entertainment, Santa Monica, Calif. Cameron wrote and directed the movie, which is the most successful of all time.

In recounting her experiences in the 10 years since she created Barney, Leach recalled that people constantly ask, "Did you ever imagine in your wildest dreams that Barney would reach this level of success? The answer from the beginning, and from each member of the team, has always been 'yes.' In our start-up naivete, we truly believed -- we just knew -- that Barney would be all over the world some day, and that he would have a TV show, a fan club and all the rest. We really believed it, we worked for it and somehow just knew these things would happen," said Leach.

Bill Mechanic, chairman and chief executive officer of Fox Filmed Entertainment, 20th Century Fox, Beverly Hills, Calif., introduced Cameron, and recalled his own induction into the Video Hall of Fame last year, when "Titanic" had not yet been released.

At that time, there were numerous reports about the film coming in late and over budget, and he said his own feelings were of "sheer terror."

"I have never been through a harsher experience in my life than the making of 'Titanic,' " said Mechanic. "And yet, as tough as it was, there was never a doubt in my mind that the trouble stemmed from ambition and not from greed or mismanagement.

Cameron spoke of the sense of responsibility he feels toward the video industry. Once, he said, movies came to the local theater and people didn't see them again until they came to television. "Now movies can live forever through video and we can enjoy almost any film any time we want at the push of a button. But knowing this brings a great deal of responsibility.

I've always urged my team to create the very best possible video transfer of my films and to put the very best picture that we can on the home screen," said Cameron.

"While I still love the overwhelming magic of watching movies on the big screen with popcorn in hand, I embrace video utterly and I take it very seriously," he said.