Supermarket NONFOODS Business: Kid vid comes of age

VHS isn't dead yet. In fact, it's still very much alive and kicking--especially when it comes to children's and family videos in the grocery channel. According to Nielsen VideoScan, while the overall video market is showing a 21/78 percent split for VHS/DVD, the grocery channel shows a 50/50 split between the formats overall. However, when it comes to family/kids' titles, 63 percent of the videos purchased are in VHS format. (Please see the chart on page 88.)

"There are still 50 million active VHS households," says Dreamworks head of domestic home entertainment Kelly Sooter. "VHS has now come down to an impulse price point—the magic $10 market—which works well in the grocery environment. They buy DVD for more general and adult-oriented movies, and they buy VHS when they think that it's a movie their kids will watch over and over again."

Add to this the fact that other retail channels, such as consumer electronics or mass merchandisers, have shifted their focus to DVD, and it becomes clear that this is a great opportunity for grocery to grab the lion's share of this still viable market. "Some of the retailers in other channels are getting out of VHS—maybe a bit prematurely," says one studio executive. "Grocers can now capture market share that they haven't had within the format. VHS is truly the family and children's product, and grocers are the primary provider in terms of that weekly shopper who comes in for groceries."

Allen, Texas-based Hit Entertainment s.v.p. Debbie Ries says its grocery retailers sell approximately 70 percent VHS, even though its Barney and Bob the Builder titles are available in both VHS and DVD formats. "It's a matter of price point," she says. "There is a consumer out there for DVD, but VHS is not dead, especially for children's video."

Plus, with the price of recordable DVD players still too high for general acceptance, VCRs are the primary devices used for recording television shows at home.

Warner Home Video (WHV) director of retail business development Rodney Satterwhite agrees, but cautions grocers not to alienate their current—and future—DVD customers. "We clearly see the marketplace will get to children's/family DVD," he says. "DVD used to be all non-family videos, but we're starting to put more emphasis on that market. We're afraid at some point, when VHS becomes less popular, that those retailers haven't built their DVD sections up correctly and will start to lose overall sales.

"We're expecting an additional 10 million households to come on board with DVD this year," he adds. "You don't want one of your customers—who has been a loyal VHS purchaser for years—to buy a DVD player and then find that you don't supply children's videos in that format. Then you lose the shopper as a video customer overall."

Regardless of which titles are brought into the grocers' mix, the successful ones have something in common: They're either tied to a strong brand, or they offer a unique or interesting educational experience for their customers' children.

Barney and grocery

Just about everyone knows Barney. According to Hit Entertainment's Ries, the purple dinosaur has a 96 percent recognition rate among U.S. households. What's less well known is that much of Barney's early success is tied into the grocery industry.

"When Barney was first launched, we produced three videos that were released over a period of one year," says Ries says. "We would get a grocery store to buy a display, and we would send a free video and a brochure about the product to preschools in the same zip code as the grocery store, referring them to the grocery store to find more videos."

Barney creator Sheryl Leach would have local women help her on these projects. Called "Mom Blitzers," these women would help sell the videos, one at a time, to retailers and video stores. (Ries, one of the original Mom Blitzers, joined Hit Entertainment when it bought the rights to Barney.)

Some of the grocery stores would feature guest appearances by Barney, which created buzz around the character. During these occasions, they would hold coloring contests and offer drawings for a Barney goodie basket.

The videos made their way into all types of retail channels and video stores as the grassroots campaign took hold. In 1991, one of the videos ended up in the hands of Leora Rifkin, the four-year-old daughter of Larry Rifkin, e.v.p. of programming for Connecticut public television. After observing his daughter's excitement at watching the show, he contacted Leach and asked her if she would like her character to be on public television. Barney & Friends made its public television debut in April 1992, and the success of the show started an explosion of preschool entertainment on television that continues to the present day.

Although Barney no longer makes personal appearances at supermarkets, fans can still win tickets to see the character's annual road shows, and selling Barney videos has become a no-brainer for many retailers. "The fact that characters like Barney, Bob the Builder, and Angelina Ballerina have really strong brand recognition makes it easy for the grocer to sell," says Ries. "They don't have to advertise the videos; they just have to make them available. Moms are in and out of the grocery store a couple of times a week."

Adding to the recognition is the Barney fan club, which has just under 300,000 members. Club members receive regular updates about new releases and where they can be found. And, to sweeten the deal even more, Hit Entertainment has brought out some catalog titles that sell for $9.99.

That price point makes video products impulse buys, says WHV's Satterwhite. "What's crucial for grocers is to be a key player in the under-$10 market," he says. "That fits the impulse nature of a lot of the products that are sold at supermarkets. If the shopper is only coming into your stores to buy a few items and only planning on spending $15, it is unlikely they will spend $20 on a new release title. But if there is a $7 or $8 title available, that is the same as renting—they get to build their library at the price of a rental."

Savvy studios

That's not to say that a television show and live events are needed to see children's videos fly off the shelves. A unique product and savvy marketing are just as important. Just stroll through the produce section of any Albertsons and you'll see why. Since the end of last year, Baby Gourmet, a video series targeting the infant to four-year-old viewer, has been using humor, creativity, music, and skits to highlight the shape, color, texture, and beauty of fruits and vegetables, and is the first video series of its kind to be sold within the produce aisles of a major grocery chain.

"We always felt we needed to be in the produce section," says Katheryn Warren, president of the Mesa, Ariz.-based company. "We tested the videos in the baby food aisle, the cereal aisle, and the produce aisle, and produce outsold the other sections three to one. Everyone goes down the produce aisle."

The Baby Gourmet series currently has three videos available: The First Course, which is primarily for the zero to two-year-old baby group, shows 18 babies exploring various fruits and vegetables, and includes some animation and word-picture association; The Fall/Winter Harvest and The Spring/Summer Harvest, designed for children up to age four, focus on holiday themes such as Valentine's Day, Easter, and the Fourth of July.

Other titles are in production for 2003, including the Food Safari series, which will use puppets to show where food comes from. "It takes food in its natural state, whether it's peanuts on the ground or fruit in a tree, and shows how it makes its way to the plate," says Warren. "Another focuses on sports and snacks, to encourage kids to not only eat right but to get exercise, as well."

Overall, Warren wants her videos to inspire children to eat healthy foods. "You see too much of the wrong food advertised on television, such as fast food and chips, but if we catch kids early and get them interested in healthy foods, it will go a long way toward establishing healthy eating habits that will carry on throughout their lives."

This is just what attracted Albertsons. The supermarket chain is committed to programs that promote not only health and nutrition, but also the education and development of our youth, according to Mike Massimino, v.p. of general merchandise sales, food stores. "Baby Gourmet is a perfect fit for this initiative. We are delighted to bring this positive and necessary video to our consumer families via our grocery stores."

New York-based MoPo Home Entertainment creates educational, music-based entertainment for young children. In its Jukebox Adventures series, president Jeff Jacobson aims at introducing kids to various forms of music. "In Country Baby, for example, we recreate nursery classics in a country style; in Star-Spangled Baby, the video features all Americana tunes, such as Take Me Out to the Ball Game, and I've Been Working on the Railroad."

The Jukebox Adventure videos teach through themed vignettes that introduce children to various shapes, using visuals such as puppets and 3D animation. "We're basically producing products that allow parents to introduce their kids to the music they enjoy," says Jacobson. "With Star-Spangled Baby, I don't have to tell you how strong patriotism is now. And the grocery store gets down into the heart of America—everyone shops at a grocery store. The same goes for country music—it's real popular right now."

If there's one area of video that absolutely cannot be replicated in VHS, it's added-value content, and grocers would do well to announce this fact to their customers. DVDs offer extras such as additional content, outtakes, and interactive components that allow for a child's input.

Dreamworks, for example, has launched a new DVD division called Dreamworks Kids, which is dedicated specifically to children's programming—be it games, activities, readalongs, or singalongs. "With Shrek, we took about a dozen scenes from the movie, and the child can insert his voice into Shrek or Donkey in those scenes," says Dreamworks' Sooter. "They record their lines, karaoke-style, using a PC, and they're captured on the DVD. When they play it back, they hear their voices come out of the characters' mouths."

The DVDs also offer a variety of set-top games that can be played right from the television, whether it's bowling with Shrek or other activities. "In Spirit, we had an area that we put in called 'Make a Movie,' and the children, with their parents, could truly learn how to put a movie together. We gave them assets from the movie, so they can add sounds and visuals, or import their own pictures into it. It's a very rich area in which they can extend their movie experience."

One company that has truly taken the added-value content to another level is Los Angeles-based Rhino Home Video. Working with DKP Effects, a Canadian-based 3D animation, effects, and compositing house, the company has created a medieval fantasy interactive movie called Scourge of Worlds: A Dungeons & Dragons Adventure.

The movie, created using computer-generated images and based on the Dungeons & Dragons role-playing game produced by Wizards of the Coast, combines more than 20 decision points, four different endings, and 900 possible story combinations, allowing viewers to choose their own adventures.

Currently, there are more than 5 million active players of the tabletop role-playing game—a nice ready-made market for grocers to tap into. In the fall, a special Collectors Edition DVD of Scourge of Worlds will be available, which will include two additional endings, 15 minutes of extra footage, a "making of" featurette, and an exclusive collectible Dungeons & Dragons plastic miniature of Mialee, one of the characters to appear in the interactive movie.

Merchandising to kids

Merchandising these videos can be as fun for the grocer as it is for children to watch them. For Barney and Bob the Builder, Hit Entertainment will be offering an assortment display that holds from 12 to 24 pieces, which can be placed out of department or used as an in-and-out program. The displays include a variety of colors, and some offer plush dolls of the characters to drive incremental revenue. "The displays are customized for each property and each release," says Hit's Ries. "The art goes with the theme of the road shows we're doing at the time. Our Halloween display had lights and pieces that moved."

The point of sale is great for small corrugate seasonal displays that place the impulse price items in the best positioning available. If there's no room at the checkout, grocers needn't worry—studios spend a great deal of effort to make their children's titles highly visible. "Our packaging is something that stands out a great deal," MoPo's Jacobson says. "We can sit with any products and still stand out."
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