THEATRICAL HITS AND MISSES MAKE THEIR WAY TO HOME VIDEO

Although the variety of material coming to home video keeps growing, theatrical releases remain the most important product source for supermarket video.This is especially so in the fourth quarter, when boxoffice heavyweights arrive from the theatrical "summer" that runs from Memorial Day weekend through Labor Day week. During that period last year, screened titles generated $2.86 billion, a record

Although the variety of material coming to home video keeps growing, theatrical releases remain the most important product source for supermarket video.

This is especially so in the fourth quarter, when boxoffice heavyweights arrive from the theatrical "summer" that runs from Memorial Day weekend through Labor Day week. During that period last year, screened titles generated $2.86 billion, a record high. This summer, with fewer films grossing at the stratospheric level of $200 million and above (and none at the $400 million escape velocity of "Star Wars: Episode 1"), film revenues have dropped.

Video rental and sell-through markets may feel the impact of that decline later this year.

Industry observers, though, don't see that as cause for alarm. "Although it was a disappointing summer for the boxoffice, which was down about 7%, the list of $100 million movies is still widespread, which bodes well for the video industry," said Kirk Kirkpatrick, vice president of marketing, WaxWorks/VideoWorks, Owensboro, Ky.

Retailers are optimistic as well. "After a summer with few hot video titles, the selection is improving, so we're hoping for a very good fall," said Craig Hill, video specialist, Harps Food Stores, Springdale, Ark.

Some view the lack of a theatrical titan like "Titanic" as an asset. "Video doesn't like all its boxoffice eggs in one basket," said Kirkpatrick. "It benefits from having a wider variety."

While blockbusters -- especially those that are family-oriented -- often dominate the sell-through market, theatrical also-rans may perform better as rentals. "Although the boxoffice is important in getting and keeping people's attention and bringing them into the store," said Kirkpatrick, "it's the movies that they didn't get a chance to see that people rent the most."

Others don't completely accept this viewpoint. "If a lot of people missed something in theatres," said Bill Glaseman, video specialist, Bashas', Chandler, Ariz., "the big question is whether that's a plus or a minus."

Some specialists see it as both, as mid-level films balance strengths and weaknesses. "'Frequency' and 'Return to Me' are both good movies and great grocery titles," said Greg Rediske, Video Management Company, Tacoma, Wash., "but a lot of people still don't know what they are. Still, we feel that they will have good word of mouth, so their rentals will hold up."

Whatever their buying strategies, all specialists are now evaluating fourth-quarter product with assistance from studios and distributors.

And while doing so, retailers continue to ponder whether studio copy-depth programs help or hinder. "Ordering isn't as much fun as it used to be," said a specialist for a large chain. "You have to rework orders and rework them again, maybe pinning them down by the third draft if you're lucky." The problem is still unrealistic goals, the retailer said, calling those for Universal in October "absolutely asinine" and those for Warner Direct "ridiculous." Those titles, however, include some of the month's top rental product, for which expectations are high.

Specialists and distributors generally agree on the month's outlook for both rental and sell-through.

"'The Patriot' and 'U-571' are both excellent titles," said Glaseman.

"'U-571,' 'The Patriot,' and 'Rules of Engagement' are all going to be very strong renters," said Rediske. "Although 'Rules' will be to a lesser degree, as it does have a somewhat anticlimactic ending."

"'The Patriot' will perform well," said Hill, "but women liked it better than men did."

Among moderate hits, New Line's "Love & Basketball" has a chance, Hill said. "It's a good movie with good acting and directing, and it has a great storyline." And although Columbia's "Center Stage" didn't fare as well theatrically, "its goals are reasonable," said Hill, "so that's a title we may emphasize for the younger market."

Other mid-level titles with rental potential include Buena Vista's "Shanghai Noon" and "Keeping the Faith," Paramount's "Snow Day," and Universal's "Skulls" and "Pitch Black."

The October market also includes two theatrical titles released at sell-through pricing. One is Columbia's "Thomas and the Magic Railroad." The other is the year's top grossing film Disney's "Toy Story 2."

"It will definitely be the largest selling animated title during the fourth quarter," said Bill Bryant, vice president of sales, grocery and drug, Ingram Entertainment, La Vergne, Tenn.

"Certainly 'Toy Story 2' will be a huge sell-through, and the rentals will be good as well," said Rediske. "I don't think the sell-through will kill the rental business because it has such a wide demographic."

November brings more hits, with the top two -- Paramount's "Mission: Impossible 2" and DreamWorks' "Gladiator" -- slated for rental. "'MI2' is obviously a slam-dunk," Rediske said. "The DVD looks especially interesting, so we may try to do some sell-through with it."

"We're going to buy heavily into 'MI2'," said Hill. "It's better than the first film, which was all action and no plot."

Another blockbuster for rental is Fox's "Big Momma's House." "That should rent extremely well in supermarkets," said Bryant. "It has a PG-13 rating, and titles of that nature usually do very well."

"For such a terrible movie it has done good business," Hill said. "I like Martin Lawrence but this one stretches urban humor about as far as it can go."

Other major November titles, both announced and unconfirmed, will be offered for sell-through. The biggest, "The Perfect Storm" arrives Nov. 14 from Warner. Bryant predicts it will be "the best selling live-action title during the fourth quarter." Hill of Harps agreed, but added that "we would rather have had it for rental, since rentals aren't as good for sell-through product any more."

Specialists look for Fox's "X-Men" to be strong as well. "It has a lot of awareness and a lot of boxoffice going for it," said Rediske.

Also likely in November from DreamWorks is "Chicken Run," which "should do very well indeed," said Glaseman of Bashas'.

Other November candidates are Buena Vista's "Fantasia 2000," Warner's "Pokemon: The Movie 2000," and Fox's "Titan A.E." "'Fantasia 2000' is a possible winner since the first film was so good," said Glaseman, "but I don't know if it appeals to today's buyers."

Opinions about the Fox release are divided. "It could be the sleeper of the year," said Bryant, "since it has great animation and so few people saw it in theatres. Sometimes this has a reverse effect and titles perform better than anticipated by retailers." But another consideration is the film's target audience. "It skews a little older than most family-type sell-through," said Rediske, "and we don't have great success with that particular demographic."

December, with fewer firm announcements, should include Universal's "Nutty Professor II: The Klumps" as the top sell-through title -- "this should follow 'Perfect Storm' closely in sales," said Bryant -- with "The Road to El Dorado" from DreamWorks also widely reported.

Likely rental hits for the month are Buena Vista's "Gone in 60 Seconds," Fox's "Me, Myself & Irene," and Paramount's "Shaft."

"'Shaft' appeals to a rental audience similar to that for 'Rules of Engagement,"' said Martin Blythe, Paramount vice president of publicity. "It's big on action and it has great music, the 'cool' element, and real star power -- Samuel L. Jackson, Christian Bale, and Toni Collette."

With an ongoing supply of hit product this fall, home video may not experience the downturn that theaters experienced this summer. "Two things make the fourth quarter bright for video compared to the theatrical boxoffice," said Kirk Kirkpatrick. "The first is the diversity of movies and the second is DVD, which is a whole new addition to the market. It spreads a lot of icing on a cake that isn't getting any bigger."