Kids’ Video

“E.T. the Extra-Terrestrial” and “Cinderella” aren’t just big hits with children. They are the top-selling videos of any kind. The third best-selling video is Disney’s “Lady and the Tramp,” followed by Paramount’s “Top Gun” and “Good Morning, Vietnam,” by Disney’s Touchstone unit, according to Video Marketing News.

How big were videocassettes in 1988? According to Paul Kagan Associates, consumers paid $1.5 billion last year for 95.5 million videocassettes. In 1987, consumers spent $1.1 billion to buy 64.9 million videocassettes. Measured in dollars, that’s a 36% gain. The Carmel-based research firm predicts that consumers will spend $1.8 billion this year on 120 million videocassettes.

Although videocassette sales are growing, the rental market is still much bigger. According to Paul Kagan Associates, consumers spent $6.4 billion last year to rent tapes--four times what they spent to buy tapes. Rental spending was up 23% last year, from $5.2 billion in 1987.

The revenue that studios make on each videocassette has dropped. Paul Kagan Associates estimates that the videocassette producers took in $10.75 last year for each cassette sold to consumers, compared to $11.50 in 1987. The research firm predicts that revenue will fall this year to $10.30 per tape.