Special offers, FSIs and shopping mall tours. Studios are pumping big bucks into promoting their direct-to-video children’s releases. But can they cut through the clutter and come through with big sales?

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Major new direct-to-video kidvid releases will be the touchstone at the annual Video Software Dealers Association (VSDA) Convention in Las Vegas this month.

As the direct-to-video trend gathers steam in the children’s category, film studios are, more than ever, throwing advertising, cross-promotional and retail support dollars into the pot to ensure the success of video titles that have bypassed the traditional theatrical release route.

Virtually without exception, the video industry executives contacted for this report agree that blistering competition in the kidvid sector calls for more innovative and, usually, expensive marketing pushes behind new releases.

Without the cushion of publicity that comes from having a theatrical release to rely upon, direct-to-video titles require substantial up-front investment by the studios in the areas of production, advertising, distribution and merchandising.

While this trend is not altogether new, its intensity is.

‘There’s huge growth in the made-for-video business that is turning retailers into the purveyors of first-run programming,’ says Steven Feldstein, vice president of communications and media relations for Twentieth Century Fox Home Entertainment.

Speaking on behalf of a studio that has just announced a US$30-million multi-media marketing campaign that is expected to hit two billion target consumer impressions for the direct-to-video launch of Casper, A Spirited Beginning, Feldstein is well positioned to comment on the trend.

‘The size of the [Casper] campaign would previously have been in the domain of a theatrical release for us,’ he says. ‘In essence, it is that magnitude of a campaign, and the retailers are going to benefit dramatically, because they are the only ones selling the product.’

‘It’s obvious that with the shortage of shelf space and the number of entertainment choices that families have,’ says Hallmark Home Entertainment president Steve Beeks, ‘you’ve got to be prepared to spend a tremendous amount on consumer advertising to help pull the product out of the store.’

Hallmark, which recently launched a co-branded kids entertainment line with Binney & Smith, makers of Crayola products, will be using the VSDA Convention to showcase Annabelle’s Wish, a new, separately branded Christmas video that will be backed by more than US$13 million in promotional spending.

The launch campaign will include national TV advertising, free-standing inserts and shopping mall promotions across America. ‘The awareness is going to be absolutely monstrous,’ says Beeks of the 60-minute animated program produced by Ralph Edwards Films in conjunction with the Make-A-Wish Foundation.

‘Retailers expect that,’ says Beeks. ‘They put the product on the shelf, but it’s our job to make sure it moves off.’

For major retailers, the ongoing trend toward direct-to-video means, in many cases, that they’ll have heavy merchandising support from the studios that may not have been there in the past.

Laura Smith, director of marketing for PolyGram Home Video, which will be featuring three new Kratts’ Creatures videos at the VSDA Convention, says major marketing support from the studio ‘is critical to the success of sell-through titles.’ In the case of the new Kratts’ Creatures titles, which are spin-offs of the top-rated PBS live-action series, they will be promoted this summer with a special offer in eight million Wendy’s Kids Meal bags. Smith says it will be the fast-food outlet’s only Kids Meal promotion supported by national TV advertising this summer.

The show’s creators and hosts, the Kratt brothers, will also go on a national promotional tour this summer. A similar tour last year drew as many as 10,000 people to one mall location in Baltimore.

While she is pleased with the popularity of the Kratts’ tour, Smith says, ‘more importantly, it gives us a chance to create dedicated retail promotions and to take advantage of the publicity surrounding the event to drive people back into the stores with bounce-back offers and other incentives.’

Smith says the property will also benefit from a strong licensing program that includes toys, books, CD-ROMs and trading cards. ‘Because everything has become so competitive and because there’s so much clutter out there, it’s very important to us to make retailers our partners in our marketing programs.’

Keith Cohn, vice president of marketing for Equity Toys of Beverly Hills, says direct-to-video titles have to be extremely popular if they’re going to drive merchandise sales at the retail level, but he believes it can and will happen.

‘They are few and far between, but opportunities do exist,’ says Cohn, explaining that the quality of direct-to-video content is getting stronger and that bigger launch events are taking place around such releases. ‘There’s definitely going to be higher-profile, viable content going direct-to-video from now on.’

Cohn says Equity, a toy manufacturer that holds master licenses for a long list of film properties, including Toy Story, The Land Before Time and The Lost World, is seeing retailers participating more in cross-promotional opportunities with studios and third parties.

‘As retailers become more sophisticated about boutiquing products, a lot more possibilities present themselves,’ says Cohn, adding that free merchandise is frequently being bundled with videos as an upsell incentive.

‘I think you’ll see retailers more open to looking at products that are based on video content. It just has to be a very, very strong property to drive merchandise,’ he says.

Mark Mears, senior vice president of North and South American sales for Promotional Partners Worldwide, a Dallas-based firm that specializes in developing premium-based partnership programs in the entertainment industry, says studio efforts are helping retailers merchandise videos more strongly than in the past.

Pointing out that studios need to develop close ties with retailers if they expect to receive much-coveted shelf space in a highly competitive marketplace, Mears says many are doing so, and in an ever more creative fashion. ‘It all comes down to creating a turnkey promotional program, whereby the retailer is basically given a package of materials that will make it easier for them to package, display and merchandise a title or series of titles at the point of sale.’

Dorrit Ragosine, executive director of publicity for Paramount Home Video, says mass merchants are particularly well positioned to take advantage of the cross-promotional nature of home video. ‘Video is really going beyond video,’ she says. ‘It’s a driver for an entire merchandise market.’

Recognizing that mass merchants are increasingly making the video section a destination spot within their stores, Ragosine says, ‘I think you’ll see videos becoming the mainstay of seasonal promotional windows, and it’s the studios that are driving it.’ Such was the case, she says, with Paramount’s release of It Was My Best Birthday Ever, Charlie Brown, where the studio created all the support material required to run year-round birthday promotions at the retail level.

Stephanie Kovner, associate director of marketing for BMG Video, which owns the video rights to the Cabbage Patch Kids property, says BMG works with retailers on an account-by-account basis to develop programs that fit their customers.

‘We like working with our accounts so that we can get their early feedback on a lot of different things that we’re doing,’ Kovner says, explaining that BMG will be doing a tie-in with Mattel to promote The Screen Test, the third direct-to-video installment in the Cabbage Patch series.

In addition to tagging on to Mattel’s advertising, BMG will be promoting The Screen Test through a major print and TV ad campaign of its own. It will also be part of General Cinemas’ summer Movie Camp program, which will feature a Cabbage Patch Kids film festival at 140 of its screens this summer.

Relating how difficult it is for studios other than Walt Disney to acquire retail shelf space for children’s videos, Kovner says, ‘Disney sells a lot of product, so they should be given priority. It’s just very frustrating. That’s why we try to develop programs that will get us some kind of support from the retailers.’

Debbie Ries, vice president of sales for Lyrick Studios, producer of Barney & Friends, agrees that new video properties are facing a very big challenge to get into retail. ‘Even good ones are finding it tough,’ she says, predicting an eventual fallout in the number of kidvid products being produced. ‘Retail’s not going to dedicate anymore space to it, so it really becomes a war between who can generate the most margin for the retailer and add real in-store excitement.’

To meet the challenge, says Ries, Lyrick conducts a large number of retail-specific value-added promotions, such as coloring contests and sweepstakes for mass merchandisers all the way down to independent stores and chains. ‘Whatever the retailer wants for their customers, we try to provide it to them,’ she says. ‘They tend to know better what interests their customers.’

In many cases, studios are having to provide more value-added service to retailers by taking an increasingly hands-on role in managing point-of-sale information, influencing signage and store layouts, and preparing product for shipment.

‘As a smaller studio,’ says Ries, ‘we’re up against competitors that might have a [US]$20-million television ad campaign for a video, and they’ll get in because of that. We have to provide a point of difference to entice the retailers to pick up our products.’

Mark Roche, vice president of marketing at LIVE Entertainment, says his studio is getting much more involved with account-specific marketing. ‘If there’s anything we can do to get a lift at retail, we’ll be involved,’ he says.

Roche says the changing nature of the retail landscape, with a greater number of general merchandisers offering video sell-through, is leading to an increase in joint sell-ins into different trade classifications.

For The Littlest Angel, LIVE Entertainment’s first direct-to-video effort under its Family Home Entertainment line, the studio will be supporting the launch by giving consumers an added-value coupon booklet, which contains more than US$100 in savings on products and services from the likes of Alamo Rent A Car, Radisson Hotels, Busch Gardens, Aunt Jemima and McCormick & Co. spices.

While the profile of direct-to-video content is undeniably on the ascent, less convincing is whether the quality of programming will be sufficient to maintain the loyalty of the buying public. Certainly, concerns exist that parents will be turned off by endless streams of rehashed video fare that offers little in the way of redeeming educational or social benefit to their children.

‘There’s a lot of low-quality children’s programming out there,’ says Hallmark’s Beeks, who advises that direct-to-video children’s titles have to be of the same caliber as feature films if they’re going to have a chance of succeeding in a crowded marketplace. ‘It’s expensive to make quality animation that will really stand up,’ he says, ‘but you have to avoid the trap of cutting corners.’

Nancy Harris, vice president of marketing for Columbia TriStar Home Video, which just launched Jungle Book 2 on video after a brief theatrical run, concurs that maintaining high standards for direct-to-video releases is important. ‘Direct-to-video will continue to do well as long as they’re good products,’ says Harris. ‘If consumers start to get disappointed with what they’re buying, it could have a negative impact on the category.

‘There’s some really good product out there that d’esn’t sell because it gets lost in the shuffle,’ she adds. ‘It’s really a shame.’

Wendy Moss, senior vice president of marketing at Sony Wonder, says one way studios can both differentiate themselves and build equity in their brands is to embrace technology such as the Internet to develop direct relationships with consumers. Moss says the technology can be highly beneficial ‘from the standpoint of communicating your activities and bringing consumers into your world so they can touch and feel and start thinking about some of your properties.’

As an illustration, says Moss, the Wonderland Web site launched by Sony Wonder earlier this year allows the company to conduct ‘knee-top marketing,’ in which a child is likely to sit on their parent’s lap while they navigate the site together.

‘We see the Internet as a form of advertising and promotion, but it’s a very soft sell in that we’re focusing on educating the child and the parent about our products,’ says Moss. ‘It’s a way of getting to their heart, to get the consumer more involved with our programming.’