The article includes the following passages:
... Perhaps no one know that [the growing impact of video rentals] than Jon Peisinger, president of Vestron Pictures, the first and now the largest company releasing movies on videotape.I found this article through Newspapers.com
"Theatrical box office this year will be in the $4 billion range, an of that, about $1.6 billion will come back to the distributors," says Peisinger. "That compares to $2 to $2.5 billion that will come back from home video.
"In only five years, we have a revenue stream that is larger than any of the existing ones, including box office. And we have eclipsed every other form of entertainment, bigger than records and the book industry, and any of the previously existing revenue streams for motion pictures.
"So you can get a picture of why this has had such a dramatic impact on the industry. The consumer has expressed an enormous appetitite for the product, and the industry is responding by creating more product."
In addition to the increase in the number of films, the advent of home video has caused a realignment in the way movies are financed.
Whereas movies were once financed by studios or wealthy investors, producers now almost always find themselves approaching video companies -- or being approached by them -- to pre-sell the home-video rights to raise additional capital.
This is a curious development, considering that only a few years ago the major studios feared that having weathered the onslaught of television, they would now meet their demise at the hands of home video. They hated the VCR, fearing, among other things, that the convenience of watching movies at home wojuld keep movie buffs out of the theaters.
But the opposite has been true -- video has apparently whetted Americans' appetitites for going to the movies. If the current trend holds true, box-office receipts will be higher this year than ever before.
Moreover, major studios and distributors have joined the home-video game themselves, creating their own home-video division to compete with such independents as Peisinger's Vestron. Now, instead of selling video rights to companies such as Vestron, most major film companies market their movies no videocassettes bearing their own labels.
Indeed, says movie industry analyst A.D. "Art" Murphy, many film producers now consider the theatrical release of a film, with its attendant advertising and film reviews, as the launching pad for the future revenues from home video. And just as movie executives once worried exclusively about how long a movie would last in the theaters, they now fret over how long it can command shelf space in video stores. ....
Perhaps nothing illustrates the transformation within the [movie] industry than the development of Vestron.
In the past, Vestron did business by buying the video rights from major studios and independent producers. But now, because of the competition, Vestron also has been forced to get into the actual financing and making of movies (the company has helped finance "a few hundred" movies according to Peisinger). In the past couple of years, Vestron has learned that it may be wiser to totally finance movies itself -- a lesson the company learned the hard way, through the success of the mega-hit Platoon.
As most film buffs know, Oliver Stone bounced around Hollywood for ten years without success, trying to get financing for Platoon. Eventually he approached a company named Hemdale, which in turn was able to get much of its backing for the film by selling the future video rights to Vestron.
But that was while Platoon was still merely a script, long before anybody had any idea it would win last year's [1986] Oscar for Best Picture. When Platoon became a runaway success, Hemdale resold the video rights to HBO. The result has been a long and complicated lawsuit -- still in litigation -- over who will get the home-video profits from the still-unreleased-in-video Platoon.
In addition, Vestron has just theatrically released the $6 million film Dirty Dancing -- its first totally financed theatrical offering -- to encouraging reviews and good box-office action. Small wonder that Vestron recently has drastically reduced its video-rights acquisition division and dramatically beefed up its movie-production division. Vestron, based in Connecticut, will partially underwrite 30 films within the next year and totally underwrite about 40 during the next two years, Peisinger says. ....
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