The Children's Video Market

1. Executive Summary
   
   The Products
   
   • Scope of Report
     
   • Two Basic Descriptors: Animation and Live Action
     
   
   The Market
   
   • Bullish Kidvid Breaks $3 Billion Mark in 1996
     
   • Kidvid Sales to Surpass $4.2 Billion in 2001
     
   • Table 1-1: Size and Growth of U.S. Children's Video Market: By Channel, 1992-2000 (retail dollars); Sell-through, Rental, Total
     
   • Popularity of Sell-Through Is Keystone of Growth
     
   • Kid Population to Stabilize, But Other Trends Will Sustain Kidvid Growth
     
   
   The Marketers
   
   • Disney Label the Untouchable Leader
     
   • Table 1-2: Leading U.S. Children's Video Labels: By Rank, 1995 and 1996 (listing)
     
   • Some Marketer Consolidation—Yet Major Players Proliferate
     
   • Kidvid Branding Is Here to Stay
     
   • Kidvid Marketers Spend About $75 Million to Advertise in 1996
     
   • A Range of Promotions Are Used by Themselves or in Cross-Promotions
     
   
   Distribution and Retail
   
   • Direct Shipment Increasingly Used
     
   • Relatively High Margins on Kidvid Sell-Through
     
   • Discounters Rule Kidvid Sell-Through, But It Is Video Stores for Rental
     
   • Figure 1-1: Share of the U.S. Children's Home Video Market: Sell-Through and Rental by Retail Outlet, 1996 (percent)
     
   
   The Consumer
   
   • Adult Purchasers of Kidvid Nearly Double, to 37 Million
     
   • Middle-Class or More Affluent Are Likeliest to Favor Kidvid Purchase
     
   • Number of Kidvid Renters Over 24 Million
     
   • Kidvid Renter Mirrors Sell-Through Purchaser
     
   
   Scope and Methodology
   
   • Scope of Report
     
   • Methodology
     
2. The Products
   
   Introduction
   
   • Scope of Report
     
   • The Children's Video Market Is Volatile, Changing, and Yet Dependable
     
   • The Stages of Release
     
   • Children's Video Within the Overall Home Video Market
     
   • Distribution a Key Feature of This Market
     
   
   The Products
   
   • Two Basic Descriptors: Animation and Live Action
     
   • Types of Content
     
   • More Titles Produced Expressly for Children's Video
     
   • Sources of Preproduced Titles
     
   • Animated Theatrical Product
     
   • Television Material
     
   • Properties That Serve as the Bases for Adaptations
     
   • Public Domain Theatrical Titles
     
   • Titles Often Geared to Specific Age Groups
     
   • Children's Video Formats
     
   • VHS and Beta Videotape Cassettes
     
   • Laser Discs
     
   • The DVD: Just Now Being Introduced
     
   • Other Potential Formats Fall by the Wayside
     
   • Typical Running Times
     
   • Packaging and Labeling Are Colorful
     
   • Special Kidvid Packagings
     
   • Children's Titles and Family Entertainment
     
   
   Government, Industry, and Popular Regulation
   
   • The FCC Does Not Directly Regulate Children's Video Content
     
   • Television Rules Affect Children's Video Running Times
     
   • The MPAA Rating System for Theatrical Product
     
   • Watchdog Groups Offer Seals of Approval
     
   • The V-Chip
     
   • The New TV Content-Ratings System
     
   • Antipiracy Enforcement Is Difficult
     
     
3. The Market
   
   Market Size and Growth
   
   • Bullish Kidvid Breaks $3 Billion Mark in 1996
     
   • Sell-Through Alone Stands at $2.6 Billion
     
   • Rental Channel, Valued at $435 Million, Makes Slow Progress
     
   • Popularity of Sell-Through Is Keystone of Growth
     
   • Kidvid Maintains Itself as Important Home Video Category
     
   • Table 3-1: Size and Growth of the U.S. Children's Home Video Market, 1992-1996 (Retail Dollar Sales): Sell-Through, Rental, and Overall Market
     
   
   Factors in Future Growth
   
   • Kid Population to Stabilize, But Other Trends Will Sustain Kidvid Growth
     
   • Lots and Lots More Grandparents to Buy Gifts
     
   • Table 3-2: U.S. Population Projections, By Age Group, 1997-2007 (numbers): Under 5, 5-14, 15-19, 20-29, 30-49, 50-64, 65+, All Ages
     
   • VCR Penetration Still Improving
     
   • Kidvid Titles Are Evergreen
     
   • Americans Have Developed Keener Appreciation of All Kids' Media
     
   • Interdependency of Media to Become the Norm
     
   • Kidvid a Way to Control What Children Watch
     
   • Repeatability Makes Video the "Ultimate Babysitter"
     
   • Sell-Through Targeted by Broader Spectrum of Retailers
     
   • Theatrically-Sourced Mega-Releases Each and Every Year
     
   • Mainstream Promos, Tie-Ins, Increasingly Taken for Granted
     
   • Kidvid Will Never Be Harmed by New Technologies
     
   • DVD Will Provide Mounting Stimulus
     
   • Interactive Media Shall Coexist With Kidvid
     
   • VOD Still a Far-Away Prospect—And One With Little Projected Impact
     
   • 500 Channels Will Just Not Matter
     
   • DSS' 150 Channels Are Greater Threat Than Cable
     
   • The Internet Just Another Outlet
     
   
   Projected Sales
   
   • Kidvid Sales to Surpass $4.2 Billion in 2001
     
   • Sell-Through to Approach $3.8 Billion
     
   • Rental Sales to Struggle Toward $500 Million
     
   • Table 3-3: Projected Size and Growth of the U.S. Children's Home Video Market, 1996-2001 (Retail Dollar Sales): Sell-Through, Rental, and Overall Market
     
   
   Market Composition: The Products
   
   • Kidvid Sell-Through Towers Over Rental
     
   • Animation Outsells Live Action
     
   • VHS Format Accounts for Most Sales
     
   
   Market Composition: By Outlet
   
   • Discounters Rule Kidvid Sell-Through, But Other Outlets Hold On
     
   • Video Stores Control Rental Channel
     
   • Table 3-4: Share of the U.S. Children's Home Video Sell-Through and Rental Market: By Retail Outlet, 1993-1996 (percent): Discounters, Drugstores, Grocery, Music stores, Video stores, Other
     
   
   Market Composition: Seasonality
   
   • Holiday Season and Harsh Weather Are Best Times for Kidvid Sell-Through
     
   • For Kidvid Rentals, Business Improves When Weather Is Severest and During Summer Vacation
     
   • Holiday Sell-Through Boom Hurts Rental Channel
     
   • Olympics Hurts Rental Turnover
     
   
   Market Composition: Regionality
   
   • Special Note on Regional Data
     
   • Little Regional Variation in Per Capita Kidvid Sell-Through
     
   • Midwest Definitely Best Region for Kidvid Rental
     
   • Table 3-5: Regionality of U.S. Children's Videocassette Use: By Sell-Through and Rental, 1996 (percent and index): Adult Use by Sell-Through and Rental Retail Channels; Midwest, West, Northeast, South
     
4. The Marketers
   
   The Marketers
   
   • Special Use of the Term "Marketer"
     
   • At Least 130 Kidvid Marketers
     
   • Most Companies Are Communications Industry Specialists
     
   • Many Marketers Are Producers, Distributors¾or Both
     
   • Actual Marketers Further Obscured by Licensing Agreements, Joint Ventures, and Fame of Producers
     
   • Table of Leading Kidvid Marketers
     
   • Table 4-1: Leading U.S. Children's Video Marketers and Representative Products, 1996 (listing)
     
     
   
   Leading Labels
   
   • Disney Label the Untouchable Leader
     
   • Table 4-2: Leading U.S. Children's Video Labels: By Rank, 1995 and 1996 (listing)
     
   • Buena Vista (That's Disney Again) Is Mightiest Distribution Label
     
   • Table 4-3: Leading U.S. Children's Video Distribution Labels: By Rank, 1995 and 1996 (listing)
     
   
   Leading Titles
   
   • Disney's Cinderella, Lion King, Pocahontas, and The Aristocats Are Top Kidvids in 1996
     
   • Table 4-4: Best-Selling U.S. Children's Video Titles: By Rank, 1995 and 1996 (listing)
     
   • Disney Titles Also Command Kidvid on Laserdiscs
     
   
   The Competitive Situation
   
   • Disney Refocuses Production
     
   • Kidvid Extends Theatrically-Originated Product
     
   • Disney Regains Primetime TV Slot
     
   • Disney Signs Pixar to Do Toy Story Sequel
     
   • Disney's ABC Video Teams With Toymaker Hasbro—For Production
     
   • Seagram/Universal's "Pullthrough Marketing"
     
   • Warner Home Video Absorbs Turner Home Video
     
   • Time Warner Founds HBO Kids, Targets Narrow Age Group
     
   • Viacom Builds TV Audience for Sunday Morning Product on UPN
     
   • Viacom Shifts Marketing of Nickelodeon Kidvid From Sony to Paramount
     
   • Fox Takes Retail-Driven Approach
     
   • How Fox Achieves "Movie Numbers" for Goosebumps
     
   • CBS/Fox Video's British Connection
     
   • LIVE, With Easter Obsession, Exemplifies Trend to Holiday Catalogs
     
   • MGM/UA Resurrects Pee Wee's Playhouse
     
   • McDonald's Mercifully Drops Video Marketing
     
   • Image Entertainment Strongest Force in Laser Discs—a Segment Ruled by Distributors
     
     
   
   Marketing Trends
   
   • Some Marketer Consolidation—Yet Major Players Proliferate
     
   • Kidvid Branding Is Here to Stay
     
   • An Extraordinary Emphasis on Promotions
     
   • Made-for-Video/Direct-to-Video Animated Features
     
   • TV Premieres Important in Kidvid
     
   • Marketing With the Anticipation of Returns
     
   • Marketing Via the Internet
     
   
   Product Trends
   
   • Lots More of What Worked Before
     
   • Products Spun Off From Other Media
     
   • Marketers Cranking Out Made-for-Video Animated Features
     
   • Holiday-Oriented Lines
     
   • "Cool" Animation Styles—and Content More Suitable for Adults
     
   • Table 4-5: Selected U.S. Children's Video Product Introductions, 1995-1997
     
   
   Consumer Advertising Expenditures
   
   • Kidvid Marketers Spend About $75 Million to Advertise in 1996
     
   • Five Spenders of $1 Million or More in 1996
     
   • However, Much Kidvid Expenditure Is Hidden
     
   • Marketers' Budgets May Vary Considerably From Year to Year
     
   • Disney, the Biggest Advertiser, Spends $58 Million
     
   • Seagram Invests $6.5 Million in Ads
     
   • News Corp. Budgets $5 Million
     
   • Lyons and Viacom Each Spend About $1 Million
     
   • Time Warner and Sony Each Spend Well Under $1 Million Range
     
   • "Other" Marketers' Budget Even Less
     
   
   Consumer Advertising Positionings
   
   • Some Common Kidvid Positionings
     
   • Ads Target Parents, Kids, or Both
     
   • Fun, Excitement, Adventure, Etc.
     
   • Characters
     
   • Teaching Good Values/Life Lessons
     
   • "Now You Can Own..."
     
   • Star Power
     
   • Occasionally, Some Positioning on Brands
     
   • Scary Stuff
     
   • Advertising Examples
     
     
   
   Consumer Promotions
   
   • A Range of Promotions Are Used by Themselves or in Cross-Promotions
     
   • Multiple Tie-Ins
     
   • Premiums, In- and Out-of-Pack
     
   • Marketers Cross-Promote Their Own Titles With One Another
     
   • Mall Tours
     
   • Promotional Advertising Examples
     
   
   Trade Advertising
   
   • Trade Advertising Extremely Important in Kidvid
     
5. Distribution And Retail
   
   Distribution
   
   • The Word "Distributor" Often Means "Marketer"
     
   • Much Vertical Integration
     
   • Release Schedules Now More Flexible
     
   • Many Distributors Handle Wide Range of Entertainment Products
     
   • The Path from Producer to Consumer
     
   • Direct Shipment Increasingly Used
     
   • Rack-Jobbers and Concessionaires
     
   • Outside Programs
     
   • Returns Overview
     
   • Wal-Mart and Blockbuster Demand Direct Shipments
     
   
   At the Retail Level
   
   • Perhaps 175,000 Outlets
     
   • Relatively High Margins on Kidvid Sell-Through
     
   • Marketers' Displays and Point-of-Purchase Materials
     
   • EDI Used by Retailers Ordering Direct
     
   • Retailers Using the Internet to Direct-Order
     
   • Marketers Trying to Enforce MAPs and Street Dates
     
   • Retailers Prepare for Christmas Starting in August
     
   • Retailers Using Free Magazines, Cyberspace to Build Customer Loyalty
     
   • For Rentals, Fridays and Saturdays Busiest
     
   
   At the Retail Level: Discounters
   
   • A New Discounter Department: Kids' Media
     
   • Loss Leaders Priced Below the MAP
     
   • Marketers' Rebates Give Appearance of Deep-Discounting
     
   • Discounters Get Assistance with Home Video Departments
     
   • Best Buy the Loss-Leader King, at $1.99
     
     
   
   At The Retail Level: Video Specialty Stores
   
   • At Least 35,000-40,000 Video Stores
     
   • In 1996, Public Video Chains Experience Growing Pains
     
   • To Compete, Smaller Specialty Stores Boost Rental Assortments
     
   • Table 5-1: Home Video Stores' Rental Inventories: By Store Size, 1994 and 1995 (number) Small (2,000 or less), Medium (2,000—4,999), Large (5,000—7,499), Superstores (7,500 or more), Average
     
   • But Sell-Through Stocks Have Plateaued
     
   • Specialty Retailers' Profits Shrink, Despite Greater Revenue
     
   • Typical Video Store Depends on Rental Business
     
   • Table 5-2: Share of Home Video Specialty Retail Sales: By Source, 1995 (percent) Videocassette rentals, Late fees, Video game rentals, Videocassette sales, Food sales, Beverage Sales, Blank tape sales, Other
     
   • Kidvid Accounts for Almost 10% of Video Store Assortment
     
   • Kidvid Ranks Fifth in Rental Turnover
     
   • Table 5-3: Share of Home Video Specialty Stores' Rental Inventory and Turns: By Genre, 1996 (percent) Action/Adventure, Comedy, Drama, Children's, Horror, Adult, Science fiction, Mystery/Suspense, Western, Erotic thriller, Classic, Foreign language, Special interest, Exercise, Other
     
   • Specialty Retailers Still Do Not Trust Indie Product
     
   • Table 5-4: Intent to Purchase Independent Home Video Product if Major Hollywood Studios Cut Back Release Schedules, 1996 (percent) Same, Increase, Decrease, Do not know
     
   • A Quarter of Video Stores Will Stock DVD—At Least Initially
     
   
   At the Retail Level: Supermarkets
   
   • BlowOut Video, a Major Concessionaire, Stresses Grocery Outlets
     
6. The Consumer
   
   The Consumer: America's Children
   
   • A Potential Audience of 58 Million Kids
     
   • Kid Population to Peak After Turn of Century
     
   • Table 6-1: U.S. Population Projections: By Age Group, 1997-2007 (number and percent): Under 5, 5-14, 15-19, 20+
     
   • Boys Continue to Outnumber Girls
     
   • Table 6-2: U.S. Children Ages From Infancy to 14: By Age and Gender, 1997 (number and percent): Under 5, 5-9, 10-14; Boys, Girls
     
   • Diversity of Kids Offers Opportunities
     
   • Three Quarters of Kid Population Is White
     
   • Table 6-3: U.S. Children Ages From Infancy to 14: By Race and Age, 1997 (number and percent): Under 5, 5-9, 10-14; White, African American, Asians*, Native Americans**
     
   • African American and Asian Kids to Expand Population Shares
     
   • Table 6-4: U.S. Children Ages From Infancy to 14: Share by Race, 1997 and 2002 (percent): White, African American, Asian*, Native American**
     
   • Almost 9 Million Kids of Hispanic Origin Comprise a Rapidly Expanding Sector
     
   • Table 6-5: U.S. Children of Hispanic Origin*: By Age Bracket, 1997 and 2002 (number and percent): Under 5, 5-9, 10-14
     
   
   The Adult Sell-Through Purchaser
   
   • Adult Purchasers of Kidvid Nearly Double, to 37 Million
     
   • But Women Are Still the Primary Purchasers
     
   • Presence of Children Ages Infancy Through 12 an Obvious Key Factor
     
   • Table 6-6: U.S. Adult Purchase of Children's Video: By Household Presence of Children, 1996 (percent and index): No child, age under 2, 2-5, 6-11, 12-17
     
   • Middle-Class or More Affluent Are Likeliest to Favor Kidvid Purchase
     
   • Table 6-7: U.S. Adult Purchase of Children's Video: By Level of Education, 1996 (percent and index): College graduate, Attended college, High school graduate, Did not graduate high school
     
   • Table 6-8: U.S. Adult Purchase of Children's Video, By Household Income, 1996 (Adults): $30,000 or more, $20,000-$29,999, $10,000-$19,999, under $10,000
     
   • Table 6-9: U.S. Adult Purchase of Children's Video: By Occupational Status, 1996 (percent and index): White collar, Blue collar, Not employed
     
   • Adults 25-44 Are Main Purchasers
     
   • Table 6-10: U.S. Adult Purchase of Children's Video: By Age, 1996 (percent and index): 18-24, 25-44, 45-54, 55-64, 65+
     
   • No Particular Census Region Favors Purchase
     
   • Table 6-11: U.S. Adult Purchase of Children's Video: By Census Region, 1996 (percent and index): Midwest, West, Northeast, South
     
   
   The Adult Kidvid Renter
   
   • Number of Kidvid Renters Leaps to Over 24 Million
     
   • Female Renters Outnumber Male
     
   • Kidvid Renter Mirrors Sell-Through Purchaser
     
   • Kids in Household Are Biggest Factor in Rental
     
   • Table 6-12: U.S. Adult Rental of Children's Video: By Household Presence of Children, 1996 (percent and index): No child; age under 2, 2-5, 6-11, 12-17
     
   • Renter Profile Skews Middle Class/Affluent
     
   • Table 6-13: U.S. Adult Rental of Children's Video: By Level of Education, 1996 (percent and index): College graduate, Attended college, High school graduate, Did not graduate high school
     
   • Table 6-14: U.S. Adult Rental of Children's Video: By Occupational Status, 1996 (percent and index): White collar, Blue collar, Not employed
     
   • Table 6-15: U.S. Adult Rental of Children's Video: By Household Income, 1996 (percent and index): $30,000 or more, $20,000-$29,999, $10,000-$19,999, Under $10,000
     
   • The 25-44 Bracket Stands Out in Kidvid Rental
     
   • Table 6-16: U.S. Adult Rental of Children's Video: By Age, 1996 (percent and age): 18-24, 25-44, 45-54, 55-64, 65+
     
   • Midwesterners Have Strongest Tendency to Rent
     
   • Table 6-17: U.S. Adult Rental of Children's Video: By Census Region, 1996 (percent and index): Midwest, West, Northeast, South
     
   • Table 6-18: Demographic Characteristics Favoring Adult Sell- Through Purchase and Rental of Children's Video, 1996 (listing): Sex, age, education, employment, occupation, family status, region, locality, race, household income, household size, children in household (age)
     
   
   Appendix I: Glossary
   
   Appendix II: Company Profiles
   
   The Walt Disney Company App. II-2
   
   • In Two-Year Period, Disney Sales Double to $21 Billion App. II-2
     
   • Disney's Redefined Three Business Segments App. II-2
     
   • Creative Content App. II-2
     
   • Broadcasting App. II-3
     
   • Theme Parks and Resorts App. II-3
     
   • Some of Disney's Wealth of Properties App. II-3
     
     
   
   The News Corporation, Ltd. App. II-5
   
   • Global Revenues of $6.8 Billion in Fiscal 1996 App. II-5
     
   • The Media Giant's Six Business Segments App. II-5
     
   • Television App. II-5
     
   • Filmed Entertainment App. II-6
     
   • Newspapers App. II-6
     
   • Magazines/Inserts App. II-6
     
   • Books App. II-6
     
   • Other App. II-6
     
   • News Corporation Film, TV, Home Video Product App. II-6
     
   
   The Seagram Company, Ltd. (Universal Studios, Inc.) App. II-8
   
   • Seagram to Post Sales of $12 Billion for Fiscal 1997 App. II-8
     
   • Two Segments: Beverages and Entertainment App. II-8
     
   • Beverages App. II-8
     
   • Entertainment App. II-9
     
   • Recreation App. II-9
     
   • Other App. II-9
     
   • Seagram Sells Off Publishing Division App. II-9
     
   • Seagram Beverage Brands App. II-10
     
   • Seagram Entertainment Properties App. II-10
     
   
   Sony Corporation App. II-11
   
   • Sales Approach $46 Billion in Fiscal 1997 App. II-11
     
   • Sony's U.S. Subsidiaries Organized into Two Main Segments App. II-11
     
   • Sony's Entertainment Properties App. II-12
     
   
   Time Warner, Inc. App. II-13
   
   • Revenues Continue Climb to $21 Billion in 1996 App. II-13
     
   • Two Business Groupings, Five Segments App. II-13
     
   • Time Warner Division App. II-13
     
   • The Entertainment Group App. II-14
     
   • Turner Acquisition Approved by Stockholders App. II-15
     
   • Like Disney, Time Warner Has Core Stable of Characters, Works App. II-15
     
   • Other Properties and Artists App. II-16
     
     
   
   Viacom, Inc. App. II-17
   
   • Revenues of $12.1 Billion in 1996 App. II-17
     
   • Powerhouse Viacom Defines Four Business Segments App. II-17
     
   • Video and Music/Theme Parks App. II-17
     
   • Entertainment App. II-17
     
   • Networks and Broadcasting App. II-18
     
   • Publishing App. II-18
     
   • Viacom a Busy Acquirer/Divestor App. II-18
     
   • Viacom's Children's Video Equities App. II-19
     
   
   Appendix III: Consumer Ads And Promotions
   
   Appendix IV: Trade Ads
   
   Appendix V: Addresses Of Selected Marketers And Industry Associations