As the hits keep coming, the video sell-through momentum is expected to be strong into the first quarter and beyond. Supermarkets are banking on three major theatrical releases scheduled for early 1995 -- "The Lion King" and "Angels in the Outfield" from Disney and "The Mask" from New Line Home Video -- to produce more record sales in the first quarter.
Retailers also are anticipating that record-breaking fourth-quarter revenues will overflow into the new year.
" 'The Flintstones' are coming out soon. Customers will still be purchasing these titles [in the first quarter]. Not everyone can buy 'Snow White' or 'Jurassic Park' this week or next week. It will take some time. 'Jurassic Park' has been out for a while now and continues to sell," noted Greg Davies, director of video operations and nonfood buyer at Dierbergs Markets, Chesterfield, Mo.
The assistant video director of a top-10 chain's Midwest division said that with "Snow White" expected to sell through Christmas and possibly
into mid-January and "The Lion King" breaking March 3, the first quarter should ride the wave of success that has been developing in the fourth quarter.
"The Lion King's potential is that of 'Snow White' or more. It could be the biggest of all time, again," said Kirk Mueldener, director of video operations at Hy-Vee Food Stores, Chariton, Iowa.
"It's great for us. The closer it is to the end of the theatrical run, the better. It keeps it fresh in people's minds. Awareness will make it a big sale. People will buy it even if it is the off-season," said Rick Ang, director of video operations at Bel Air Markets, Sacramento, Calif.
Ang, like other retailers, already has capitalized on the title's popularity by merchandising Lion King-related merchandise such as read-along and sing-along books and tapes.
"We are keeping up the awareness of 'The Lion King' in the stores. It looks like we will be able to do it right up until the time it comes out," Ang said.
Retailers favor major releases that go direct to sell-through close after their theatrical runs because they can benefit by buying deep for rental at low sell-through prices.
"We did well on 'Ace Ventura,' so I feel good about 'The Mask.' I think 'Angels in the Outfield' is going to sell and do well. The $19.98 suggested retail price gets it down to where I can sell it for $12 or $13 and change. Theatrical releases sometimes do move fairly well. If anything, it will rent like mad and we'll still make a ton of money," Mueldener said.
For the studios, whether or not to take a theatrical title to sell-through or rental can be a crapshoot.
The title's success at the box office is a critical factor. Studios can hope to recoup box office losses by first going to rental, or they can cash in on the high demand of a box office hit through sell-through.
Other considerations in determining how to market theatrical releases are the content of the product; consumers' intent to purchase the title; repeatability of the title, and how well prepared the studio is to market sell-through.
Some retailers predict that more titles will go direct to sell-through.
"It seems like they are starting to bring out more movies at sell-through prices," said Karen Welch, video buyer at Clyde Evans Markets, Lima, Ohio.
The chain has a permanent section for sell-through video and also orders shipper displays of certain new releases, she said.
"I still think more people would rather rent than buy. We sell a lot of previously viewed tapes. It was kind of slow at the beginning, but since people caught on to the idea, they are buying all of their favorite movies. That has really taken off. We can create a whole end-aisle display [of previously viewed tapes] and the next day half of them are already gone," Welch added.
Sell-through is becoming a bigger business with the release of more hit movies, said Davies of Dierbergs.
"We have always had permanent sell-through racks in most of the stores," he said.
Sell-through is becoming a bigger, year-round business, even though a large portion of the product is sold in the fourth quarter, according to statistics compiled by Alexander & Associates, New York. Over the last four years, first-quarter sell-through has posted double-digit growth in units. Sales for the first quarter ended March 31, 1994, were up 32% to 123.8 million units from 93.9 million units in 1993, the firm reported.
"Every year titles are released in March and April. It's probably because the big sell of all the big titles will have quieted down by then and they may have the market to themselves," said Amy Innerfield, a video industry analyst at Alexander & Associates.
" 'The Lion King' is a title people are going to buy no matter when they release it. People would have bought 'Snow White' whenever it came out. It is the Disney franchise and the name. Other titles might not have as much success," she added,
Last year in March "The Fox and the Hound," "The Fugitive" and "We're Back" were released for sell-through, Innerfield noted.
Russ Kates, partner and co-owner of Steele's Markets, Fort Collins, Colo., said he expects "The Lion King" to perform like "Jurassic Park," which was slightly slower to sell than "Snow White." "Snow White" was out the door in a day or two, while "Jurassic Park" sold through in about a week.
"We are not real big in sell-through because we can't make any money on them," Kates said.
The stores face tough competition from Wal-Mart and its Sam's Club operation, Target and Blockbuster, he said. "We're lucky to break even."
"A lot of times we get stuck, so we usually just do a shipper. That usually works well for us. There is always plenty available. If we need another shipper, we can get one the next day from our supplier," Kates said.
The assistant video director for the Midwest division of a top-10 chain said that running coupons for the first week of a sell-through video's release, in addition to offering any rebates, has helped to boost sales.
"We usually have a large sell-through video section. We promoted 'Jurassic Park' with a $5-off coupon good for the first week of its release and sold 10 times more in that one week than we normally would on a sell-through," the assistant video director said.
"Also in January we will probably do a $9.99 video push. We do small video promotions of titles that have been hits in the past that we promote at $9.99. Then we can go right to 'The Lion King,' " the assistant video director said.
