After weeks of speculation, Paramount Home Video is expected to announce soon that "Ghost," one of the largest box-office hits of last year, will be released as a videocassette on March 21. Paramount sets no retail price on its videos, but using an industry formula based on the wholesale price that Paramount has said it will charge distributors, "Ghost" should cost $100.
The high price raises a question heard frequently in video stores. Why are some new hit movies priced low when they are first released and others priced four or five times higher?Why does "Pretty Woman," nearly as big a hit as "Ghost," cost $19.99 and "Total Recall" $24.99 when "Dick Tracy" is priced at $92.99 and "The Hunt for Red October" $99.50?
"Customers are confused about prices," said Jack Messer, president of the Video Software Dealers Association. "They're particularly confused when two or three movies come out at the same time. How can one be $19 and the others $90?"
The answer, of course, has to do with profit, or rather potential profit.
By offering a videocassette at a lower price, a studio is gambling that income from sales direct to consumers will exceed income from sales to rental outlets.
Studios normally sell several hundred thousand cassettes to rental dealers at wholesale. For the higher-priced videos, the wholesale price ranges from $65 to $70; for the lower-priced, it is about $15. By offering the film at the lower retail price, the studios are hoping that sales to the public will reach into the millions.
Based on its performance in theaters, "Ghost," which many liken to "Pretty Woman" in its audience appeal, would seem a likely candidate for a lower sale price. Officials at Paramount won't comment on the coming release, but in a recent interview Eric Doctorow, executive vice president of Paramount's video division, mentioned factors beyond the box office that would influence the studio's decision to rent or sell.
Some of the considerations, he said, are related to the weakening economy and whether, if Paramount decides to make the film a sales title, stores will be able to stock it in the millions of copies.
"As we move into a recession, dealers are careful about building inventories too high," Doctorow said. "Consumers also tend to be more cautious. Renting a cassette is a true bargain."
But while rentals still dominate video, industry figures show that sales of hit movies - along with sales of older films and non-theatrical titles of all kinds - are the fastest-growing area of the industry.
Children's films, animated or otherwise, generally make the strongest candidates for sales. "The things that do best have great kid appeal because kids are the audience that will repeat them over and over," said Ron Castell, a senior vice president at Blockbuster, the nation's largest chain of video stores.
Disney, for instance, has had many sales successes with its animated films - "Bambi," "Peter Pan," "The Little Mermaid" - as well as such theatrical titles as "Honey, I Shrunk the Kids," which was released early last year. Each of those films carried a lower price tag.
But other types of films also sell well. One notable example is "Pretty Woman," which has been at or near the top of many best-seller lists since its release last October by Touchstone, a Disney company. The sales success of "Pretty Woman" is linked to its popularity among women and its musical score, among other reasons.
Action-adventure also sells strongly - "Indiana Jones and the Last Crusade," "Lethal Weapon 2" and "Total Recall," all released last year, are examples - provided that their helpings of sex and violence aren't objectionable to either consumers or outlets, particularly mass merchandisers anxious to preserve a family image. These films all sold for $25 to $30.
Other sales titles perform well for reasons ranging from their stars to their collectibility as a genre or as part of a series ("Indiana Jones," for example), or suitabilty as gifts.
But many of those in the video business say it's a rare movie - a "Batman," "E.T.," "Top Gun," "Honey, I Shrunk the Kids," "Peter Pan," to name a few examples - that has sufficient mass appeal to make it more profitable for a studio to sell it than to make it a rental title.
With a decision imminent on "Ghost," video industry speculation turns to the price of the "Home Alone" video. The film would be CBS/Fox's first major theatrical sales title. "Timing, demographics, marketing," said G. Bruce Pfander, vice president of CBS/Fox. "If they all come together, you roll the dice."