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COMPANY TOWN

The Special Challenge of Special Interest

Video: Sales of theatrical titles are booming--but in the niche market, risks are high and financial rewards are often few.

June 17, 1997|THOMAS K. ARNOLD | SPECIAL TO THE TIMES

Albert Nader, president of Questar Home Video, is keeping his fingers crossed, hoping the documentary about Tibet his company is releasing this month will sell enough copies for the filmmaker to recoup at least half his investment.

Counting materials, production and time--14 months in the rugged Chinese high country north of the Himalayas--it cost cinematographer William Bacon upward of $100,000 to produce the 54-minute film.

"But all we could give him was a small advance," Nader said. "Over time, say five years, we'll sell maybe 50,000 copies, and he'll get a dollar apiece. But that still falls far short of what he put into it--and he's got to wait five years for his money to come in."

Nader said Bacon's experience in the video business is typical. The special-interest video market is a "labor of love," he said, where the risks are high and the financial rewards few.

While the theatrical movie side of the video business is flourishing, with sales at an all-time high, the market for specialized video fare is expected to remain flat this year, according to a study by Cambridge Associates, an entertainment research firm based in Stamford, Conn.

Of the estimated $7.5 billion that consumers spent on videos last year, Cambridge says, about $853 million, or a shade above 10%, was spent on video documentaries, travelogues, classic TV episodes and other niche programming.

What's more, Cambridge says, nearly 90% of special-interest video revenues are reaped by the top 15 suppliers, such as Time Life, A&E, PolyGram and BMG.

The tiny slice of the pie that is left gets divvied up between dozens, perhaps hundreds, of independent program suppliers like Chicago-based Questar. For the little guys, Nader said, bringing special-interest video product to market is becoming tougher.

Cambridge estimates that 65% of special-interest videos are sold through direct-response marketing. But tiny suppliers can't afford the multimillion-dollar national TV campaigns used by heavyweights like Time-Life to move millions of copies of "The Trials of Life" and "The Firm."

"You've now got the majors in it, and they have learned how to really market it," said Paul Caravatt, who runs the Educational Foundation of Special Interest Marketers and Producers. "That's where all your growth is coming."

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On the retail side, which accounts for 35% of overall sales, video stores as well as big discounters such as Wal-Mart and Target are focusing on hit movies at the expense of everything else.

"We're not in retail, because nobody wants to buy us," Nader said. "When people walk into Blockbuster, they walk in for a feature film; they don't expect to see 'Seven Wonders of the Ancient World' or 'Great Cities of the Ancient World.' "

Further hurting the special-interest suppliers is price erosion. The price of new movies on video has steadily dropped over the last few years, to the point where even big films such as "Independence Day" or "The Hunchback of Notre Dame" sell for less than $15.

As a result, said Caravatt, "the idea of purchase has grown, but so has the belief among consumers that every movie should be priced at $12.95--a price point that special-interest video suppliers, who don't deal in big quantities, find hard to maintain."

Nader will attest to that. "Unlike movie studios, we don't have theatrical, we don't have TV, we don't have airline," he said. "When we produce a video, the only source of revenue we have is video, and the pressure of coming down to $19.95 and $14.95 makes it very difficult for us to break even, much less make a profit."

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No wonder, then, that at a special-interest video conference in February in New York, Cambridge Associates President Dick Kelly told the 100 or so attendees, "Your chances for success lie in forming a relationship with a major program supplier."

But not everyone wants to do that--and according to some independent special-interest suppliers, there are other ways to make a buck.

Gary Goldman, president of Goldhil Home Media International of Thousand Oaks, notes with pride that "50% of the product we release is successful, and that's a very high percentage in this business."

He attributes this success in large part to "understanding the type of product the consumer is interested in purchasing" and then tailoring distribution to the target audience. Niche documentaries such as "Antique Farm Tractors" are best sold through specialty catalogs, Goldman said, while more "visual" titles, like "Volcano: Nature's Fury" or "The History of the Bikini," do well at retail.

Tie-ins also help, Goldman says. When the movie "Twister" came out, Goldhil put together a documentary, "Twister: Nature's Fury," that sold more than 400,000 units, mostly at retail.

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