Shopping For Hollywood's Hits

By Richard Zoglin

He enchanted movie audiences back in 1982 and earned $700 million at the box office, an all-time Hollywood record. Now E.T. is finally getting set to materialize in video stores. But a mystery surrounds the cuddly alien's long- awaited debut on videocassette, scheduled for this fall. Will E.T. be priced in the stratosphere or at a more down-to-earth level?

As frequent visitors to the local video outlet know, there is scant middle ground these days. Most recent Hollywood releases, such as Dirty Dancing and RoboCop, are hitting the stores with a stiff suggested list price of nearly $90 -- or even $99.95, in the case of last year's Oscar winner Platoon. Yet some big hits, like Top Gun and "Crocodile" Dundee, have been introduced at a much more affordable $29.95 or less. Confused consumers may ask: Why the discrepancy? The answer goes to the heart of a key issue facing the home-video industry: figuring out which movies VCR owners want to rent and which they want to buy.

In the case of most films, home-video companies figure that fans will be satisfied with a one-night stand. The companies set the price high, assuming that most cassettes will be bought only by retailers, who in turn will rent them to customers and keep all the rental income. (The price is typically reduced eight or nine months later.) But a few studios, notably Paramount and Disney, have pioneered prices of under $30 for first-run releases deemed to be collectible. These include pop entertainments like Raiders of the Lost Ark, cult faves like Star Trek IV and children's classics like Lady and the Tramp (the biggest-selling movie yet released on video). Industry observers believe E.T., with its enduring family appeal, will wind up in the low-priced camp.

Generally, however, prices seem to be trending higher. Paramount released Beverly Hills Cop on cassette in 1985 at $29.95. But when Beverly Hills Cop II arrives in the stores this month, it will sell for $89.95. Paramount executives explain that they are simply being selective about which films they target as probable big sellers, and thus candidates for bargain prices. Says Bob Klingensmith, president of Paramount's video division: "You don't have a Top Gun every month."

Hollywood has found other ways to reap revenue from the burgeoning home- video market. Cassette viewers have started to find commercials preceding their movies: a Pepsi ad on Top Gun, a Nestle's commercial on Dirty Dancing and a Lee Iacocca "tribute" to Chrysler's Jeep vehicles on Platoon. Home- video executives say they are proceeding cautiously with ads, but proceeding. "We'll do more, but only if the movie lends itself to a product," says Alvin Reuben, a vice president of Vestron, which released Dirty Dancing.

The fact is that movie buffs seem ready to plunk down their bucks almost no matter what is on the tape. With VCRs in 54% of U.S. homes, an estimated 65 million movie cassettes were sold in 1987 (up from 51 million in 1986), and 3.3 billion were rented (up from 2.2 billion the year before). Newly minted cassettes of Hollywood classics are flooding the stores, and TV ad campaigns now alert buyers and renters to the release of recent hits. Notes a bullish Louis Feola, senior vice president of MCA Home Video: "There is a generation of kids growing up who do not remember life without a cassette."

With reporting by William Tynan/New York and James Willwerth/Los Angeles