The home-video industry was hit with more bad news last
week concerning its recent business slump.
Two industry-research sources showed that lower sales of
top titles caused a noticeable decline in the sell-through market in 1997. Purchases of
some catalog product, however, actually increased.
Home-video rentals dropped 3 percent last year, as well,
although the loss was not as great as the 9 percent drop facing the video business in
early 1997, according to the studies.
VideoScan showed that video sales fell 5.1 percent in 1997,
to 267 million units, in the 16,000 video stores that report to the point-of-sale tracking
service. The most drastic decline was in sales of VideoScan's top 10 titles, which fell 31
percent, to 30 million units, compared with 1996 levels.
In contrast, noncharting titles -- those that didn't
make VideoScan's top 100 list -- experienced a 6 percent surge, accounting for 181 million
An analysis of year-end data compiled by
research-and-consulting service Alexander & Associates showed a similar trend.
Surveying a much larger base, total video sales for the year fell 10.6 percent, to 657.3
million units -- the first time that Alexander has recorded a decline in unit volume from
one year to the next. Consumer spending on video fell by a similar percentage, to $9.3
billion, according to the study.
It's unclear, however, whether the decline will affect the
number of sell-through titles that eventually reach pay-per-view. Request Television
projected that 20 films earning more than $10 million at the box office will be priced to
sell -- rather than to rent -- during the home-video window in 1998, up from 15 in 1997.
Cable operators have long complained that sell-through
windows adversely affect PPV buys for top movies. Along with increased exposure due to
lower sales prices, studios often extend the video window for sell-throughs by as much as
90 to 120 days.
But Debbie Barackman, vice president of programming for
Request, said sell-through titles are hitting PPV with shorter windows. Men in Black,
for example, featured a 67-day PPV window, while The Lost World carried a 75-day
"Sell-through titles seem to be running on par with
last year, but their effect on PPV is contingent on the windows," Barackman said.
Barbara McNamara, general manager of Alexander's Video
Flash tracking project, attributed the drop in top 10 sales to the lack of a dominant
title in the "family-film" category, defined as movies rated G, PG or PG-13.
Both Alexander and VideoScan showed a marked decline in
fourth-quarter video sales, as well. Alexander said late-year sales fell by 28 million
units from 1996; VideoScan showed a 9.3 percent decrease in quarterly sales, from 108
million units to 98 million.
"The drop in the total fourth-quarter purchase
volume," McNamara said, "accounted for over one-half of the total drop for the
whole year, and it was concentrated in top titles."
The news was not all bad for the industry, however. Rental
revenues for domestic Blockbuster Video stores rose 2 percent during the fourth quarter --
the first positive movement for Blockbuster since the second quarter of 1996. Parent
company Viacom Inc. attributed the increase to the addition of company-owned stores, which
climbed by 732 from the prior year. With the increases, Blockbuster has 6,049 stores
Marcy Magiera is an executive editor for Video Business,
a sister publication to Multichannel News. Video Business reporter Brett
Sporich also contributed to this story.