SAN FRANCISCO — The rapid growth of the home VCR market has created a fourth network that will be a prime target for corporate-sponsored programs in the 1990s, say executives in the booming business television industry.
Corporate America is spending $6 billion a year on video production as it capitalizes on VCR sales and satellite technology, said Len Magsamen, president of the International Television Assn., at its recent annual meeting.
"In the 1980s, television has become an integral part of corporate culture," said Magsamen, who noted that the industry is growing 20% annually.
"The vast majority of Fortune 500 companies are already using video, and the demand for it will not subside," he said. "All our indicators show demand is going through the roof. The challenge for our members will be to keep up with that demand."
Companies are using video to train and communicate quickly and more effectively with their employees and management around the country or overseas, Magsamen said. And increasingly they are turning to video to introduce products and promote them to clients and market directly to customers at home.
With videocassette recorders in nearly 60% of American homes, corporations are finding video a useful marketing tool, said Carl Levine, director of corporate television services at Unitel Video Inc. in New York.
The growth of the home VCR market has created "a fourth network" that serves as "a distribution medium for corporate-sponsored programs to go into homes," Levine said. "Look for that in the 1990s as being a very large growth area."
He cited such tapes as a camera company's instructional video on how to take pictures, with a catalogue of accessories at the end; a power tool company's home improvement video, featuring its products; Sports Illustrated's swimsuit issue, or financial programs designed for seniors, young married couples or other groups.
"Corporations can target a specific audience, produce a program and, through their mailing lists or in-store promotions, reach their audience on a cost-efficient basis, now that there's such a large VCR market," Levine said.
Drug companies and medical equipment manufacturers can make similar programs for doctors, he said.
The biggest change the business television industry has seen over the past few years, Magsamen said, has been the increasing number of independent companies or individuals, who are hired by corporations for production, editing, writing, taping and other jobs.
"We mirror corporate America, and over the last three to five years corporate America has been going through a restructuring period, skinnying down," he said. "Demand for video has not decreased, so they're looking for independents to do the work."
Unitel Video is among the largest of the companies benefiting from that trend. It doesn't produce the tapes, but it provides studios, editing rooms, duplication and graphics out of New York, Hollywood and Orlando, Fla., and its mobile trucks span the country.
"Corporations need the same production values that viewers have grown accustomed to when they watch broadcast, cable or home video programming," Levine said.
Many large corporations, such as AT&T, GTE, Federal Express and Hewlett-Packard, maintain their own video departments.
Outpaces Other Segments
Business television will continue to outpace other segments of the TV industry, Levine said.
"Broadcast television has been cutting back in recent years, offering many employees early retirement packages, and the cable industry has never turned into the form of original programming people expected," he said. "If you look at the independent market, especially outside Hollywood or New York, the largest portion of their business is for the corporate sector. And even in New York, corporate TV has become a large sector."