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TK's MORNING BUZZ: Instead of Fighting the Public Clamor for Hits, the Industry Fed It -- And Look Where We Are Now!

27 Sep, 2000 By: Thomas K. Arnold

The karaoke party drew a huge crowd of participants and revelers alike. (Hive News Photo)

ATLANTIC CITY, N.J.—Midway through the East Coast Video Show, I was hit by the irony of things. The video industry is in turmoil, and yet the party scene last night was more boisterous, more festive, than it’s been in the five years I’ve been coming here.

The anime party was a blast, and the karaoke party that followed was a blitz of dancing and some incredible singing on the part of wannabe teen sensations.

I'm sorry I missed Bruce Apar's stunning vocal interpretation, with Tom Rooney and David Goodman, of "It's My Party," but my absence was more than made up for when I was dragged up on stage while show director Kimbirly Orr crooned "Stand By Your Man" in my ear.

The other thing I noticed about both parties was how much work was getting done. The anime folks who sponsored the anime party were mingling and talking business with retail clients, and during the karaoke party there was plenty of networking in the halls. I overhead VSDA board member and Texas retailer Ross Flint discussing late fee collections with a group of retailers, while I was cornered by at least a half dozen retailers whose questions all boiled down to this: What, exactly, is going on in this business, and how did we get to this point?

A conversation with a New Jersey retailer who got into the business in 1986, "made a lot of money for a lot of years," and now wonders how long he’s got left led to this train of thought: The groundwork for the sad state of affairs we are now facing was laid back in late 1993 and early 1994, when the business was recovering from the recessionary early 1990s and retailers were breathing a collective sigh of relief that they had survived the great shakeout of the early years of that decade.

Around that time, we began noticing a precipitious decline in ‘B’-title sales. Video rental was a maturing industry, the novelty of the VCR had worn off, and consumers were starting to go for the hits. Independent suppliers who had been accustomed to moving 20,000 and even 30,000 units of a decent secondary title were alarmed to find sales cut in half, and several independent suppliers, including Prism Entertainment and Academy Entertainment, threw in the towel.

As the years progressed, consumer tastes continued to run toward the hits--to the point that in 1997, when a slate of weak theatricals came to video, rental revenue for retailers and studios alike went south. Live by the hits, die by the hits, everyone said--and the solution was to find a way to get more hits into stores and thus satisfy consumers’ still-growing propensity for theatrical blockbusters.

Thus began revenue-sharing, copy-depth, the aggressive market-share wars between Blockbuster and Hollywood and the slow death march of the independent video specialty retailer, who no longer could compete against the big guys, with their 200-plus copies of the latest big hit and five-days rentals, to boot.

What can be done now? Probably nothing. What should we have done back then, in 1994? Therein lies the key to our predicament.

In my opinion, the falloff in secondary-title sales and rentals should have been taken as the ominous sign it was. The industry should have immediately taken steps to change consumer behavior before it was too late. With the first sign of a slowdown, the industry should have embarked on a generic awareness campaign, stressing video’s convenience and selection and focusing on the variety and diversity that home video offers compared to competing delivery systems, such as pay-per-view.

Studios should have focused on bringing better product to the ‘B’-title table, and instituted some sort of pricing structure under which retailers could bring in two or three secondary titles for the price of a theatrical hit. Studio and distribution reps should have worked with retailers to develop special sections in stores, to pump up ‘B’ titles under such categories as cult, slasher, foreign, art-house, and the like.

Yes, consumers have a natural propensity to the hits, but if we had come at them with all guns blazing I firmly believe we could have arrested this trend, or at least slowed it down.

Instead, we caved in and panicked. Our great industry minds concluded that if consumers want the hits, we need to give them the hits, more of them, and guarantee their availability. As for secondary titles, Hollywood threw in the towel, figuring there’s no chance for recovery.

At a conference in early 1994, Bill Mechanic said that 80% of what video stores rent is films you can’t get anywhere else--not on cable, not on pay-per-view, not anywhere--and that it was this distinction that would keep video stores alive well into the future.

Well, that distinction has been lost. Instead of fighting the public clamor for the hits, we fed it. And when there’s nothing but bones left on our plates, we have no to blame but ourselves.

Comments? Contact TK directly at:TKArnold@aol.com

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