Youth market, new technology sustain growth in audio/video

Drug Store News,  May 17, 1999  by Allene Symons

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Technology in transition contributed to a less than stellar year for blank audio and videotape overall. But on the entertainment side of recording media, pre-recorded video fared better than the prior year in most retail channels, including drug chains.

In chain drug stores, several hit titles and ongoing demand for children's product helped sustain the pre-recorded video category. Sales were boosted by strong family and adult titles, including Paramount's "Titanic." The kidvid wave shows no sign of slowing yet, or as Warner's director of marketing, Dan Capone, told Drug Store News, "We have another baby boom going on, and the primary shoppers in chain drug are moms."

In children's video, Warner was bullish about its Teletubbies titles last year, and moms also went for Lyrick's Barney videos, including "Barney's Great Adventure," for their preschoolers. Both are bound to be big this year, as well.

Last year, Disney brought a collectible classic, "Lady and the Tramp," out of the vault for the first time in years. Two other big Disney titles in 1998 showed the continuing strength of sequels made directly for video: "Lion King II: Simba's Pride" and "Pocahontas II: Journey to a New World."

For all channels, pre-recorded video is starting to flatten out and feel the squeeze of other distractions, such as the Internet. But year-to-year comparisons are impacted by the individual titles released by studios, and this makes it hard to compare year-to-year results in pre-recorded video.

Barbara McNamara, manager of home video for New York City-based Alexander & Associates, a research and consulting firm, reported that home video on VHS (sell through) rose for all channels by 2.9 percent (in units)--an improvement over the previous year's 1 percent decline.

According to Alexander's Fourth Quarter Holiday Market Shapshot Report (tracking video sales from mid-November to early January 1999), during that period 1.7 percent of unit video purchases in all channels were made in drug chains, slightly less than in the previous year during the same period. But due to the mix of titles, a slip in share compared to other channels--particularly in an overall growth year fueled by "Titanic"--isn't bad news. It's no surprise that some industry observers peg drug chain 1998 dollar growth for pre-recorded video in the low double digits.

Studios recognize that the major drug chains are an important neighborhood outlet for their latest hits, especially family fare and children's video product. Now the studios have two challenges: to encourage drug chains to carry a broader range of video product and to add the digital video or versatile disk (DVD) format. In 1998, only a couple of chains, including Longs and Eckerd, began to experiment with this format. More drug chains are expected to offer it in coming years as the number of DVD players in households expands.

New segments on horizon for blank A/V

Blank audio and video held on in 1998, despite changing technology. New segments were the bright spot in blank video, although the blank audio and video category declined in sales from the year before.

Blank audio and videotape are a solid staple in drug chains, even if they don't show the growth of some other segments. Consumers expect to find both kinds of recording media, and, like batteries, no chain drug store would be without them. Nonetheless, when taken as a single segment, blank audio and video cassettes were down 3 percent in units and 2 percent in dollars for drug stores in 1998 compared to the previous year, according to Information Resources Inc.

When video is viewed separately, as it is by the Consumer Electronic Manufacturers Association, factory sales of blank video cassettes grew in units but slid in dollars in 1998. This reversed a pattern in unit sales from the previous year but continued the dollar sales pattern of the past three years.

Commenting on sales patterns in this category, Don Patrican, executive vice president of sales and marketing for Maxell, noted that although overall blank video was down, there were bright spots--with drug chains seeing double-digit increases in camcorder formats, 8mm and VHS-C, and in longer-length T-160 (VHS).

What's more, new technology promises growing sales in a new segment of the blank product category: "With the rapid success of CD-R music hardware, many of the drug store chains have added CD-R music, a blank CD for recording music," said Patrican, who believes that the success of CD-R music should help chain drug stores ease the decline of the blank audio cassette category.

The growing youth market of baby boomers' children is likely to help drive this new recording segment in the future. In the meantime, some drug chains, such as Eckerd, are starting to offer pre-recorded audio selections, including music compilations designed to appeal to the memories of their mature customers.

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