Video history in the making

Names change, but issues stay the same

By Marcy Magiera -- Video Business, 10/21/2005

OCT. 21 | For a quarter century, Video Business has covered the home entertainment industry’s inner workings, growing with and mirroring the now $24 billion-plus industry.

Launched when the videocassette was still in its infancy, the magazine—then a monthly—focused largely on new home entertainment hardware, including satellite TV, videocameras and videodisc players, and only secondarily on the nascent software market, which later would come to dominate the magazine as studio release slates grew and new retail channels sprouted to support them.

A look at those early software stories shows some that are interesting only in a historical context and others that still resound with relevance today.

“Will hitless Hollywood cause a video void?” (August, 1981) and “Magvideo closes release gap” (February, 1981), about pioneer Magnetic Video striving to release 20th Century Fox movies on video eight to 12 weeks after theatrical to curb piracy and capitalize on theatrical marketing, could be ripped from today’s pages—with current company names substituted, of course.

“Columbia puts 10 titles on laserdisc” and “Disney launches Dumbo as first rental-only cassette,” meanwhile, clearly are dated.

That’s the thing about spot business news: Every headline feels important when it’s written, but only a few, viewed historically, really are.

Remember 8mm? DIVX? Moovies? New Leaf? Limited-play cassettes? That elusive industry marketing campaign? Blockbuster’s move into broad-based retailing? All topics covered thoroughly, accurately, in a timely manner and, often, exclusively, in Video Business. But none of which, viewed with the perspective of time, had any lasting material impact on the course of the industry.

The really important stories, it’s easy to see in hindsight, have not been single headlines, but series of them, telling the story over time of the developments that have shaped the industry.

In the early ’80s, such headlines were devoted to the studio-devised “rental plans” that grappled with setting pricing and terms for the fledgling tape rental business. In the late ’80s, promotional tie-ins with packaged goods companies took video’s consumer marketing to a new level. The ’90s brought rising rental prices that topped out above $100 for a VHS copy, then copy depth programs allowing retailers to stock many more copies cheaply and a change in store accounting that depreciated titles more quickly and so changed the whole way retail operations were valued. Among the most important developments covered in the pages of Video Business over the past 25 years were:

Sell-through

Arguably the single most important development in the history of home entertainment, sell-through pricing allowed VHS to flourish in a broad range of places and laid the foundation for DVD to be introduced at a popular price. The widespread availability of hit movies for less than $30 moved video beyond rental, music and other specialty stores and into the broader merchants that now drive the industry—Wal-Mart, Target, Best Buy and others of their ilk.

DVD

The fastest-adopted new format in consumer electronics history, now in more than 75 million U.S. households, reset the home entertainment trajectory and solidified video’s place as the major revenue contributor to the motion picture companies, holding video-on-demand and the digital downloading of movies via the Internet at bay.

Initially driven by film enthusiasts who built large libraries, the shiny disc—with its slim dimensions and capacity for extra content—created the opportunity to sell other genres, including TV, music and special interest programming. It also spawned an entirely new industry of creative service providers making extra features and created new opportunities for independent filmmakers and program suppliers, who were able to manufacture niche titles for less and sell them in more places than ever before.

Retail consolidation and direct distribution

The old adage about 20% of retailers providing 80% of the studios’ business may now be even more exaggerated, the result of the growth of sell-through and the rapid consolidation of small retailers into large (the mid-’90s alone saw thousands of independent rental operators gobbled up by major chains, which then gobbled up one another).

Circumventing wholesalers and selling titles directly to those “20%” key accounts, ranging from Wal-Mart to Movie Gallery, has allowed studios to better control the merchandising of their titles at retail and has given large retailers a louder voice in what product studios bring out, when and at what price point.

The Internet

With no physical limits on the “shelf space” used to display titles, Internet retailers led by Amazon and Netflix have created a new market for independent films and other specialty titles that previously would not have found distribution.

These retailers also have access to unprecedented information about consumers’ browsing and buying habits, and the ability to create individually customized shopping experiences drawing on this knowledge. Outside of its retail function, the Internet also provides connectivity options for DVD and customized marketing opportunities.

As Video Business begins its 26th year, the next industry-changing development is already playing out in the form of high-definition DVD. But it will take a lot of headlines to see its true impact on the industry.

E-mail Marcy Magiera