Home-video marketing folks traditionally have had one thing on their minds: sales. Promotional programs were designed to drive sales to rental outlets or directly to consumers. But the revenue-sharing paradigm now permeating the rental market has movie studios just as interested as Viacom in making it a Blockbuster Night.

Revenue sharing started coming into vogue last year, when market leader Blockbuster Video, Dallas, adopted it to address sagging profits. (Distributor Rentrak Corp. has been employing the strategy for more than 10 years.) Now, many retailers are negotiating deals in which studios drastically reduce the purchase price of titles – from $70-plus to less than $10 – in return for as much as 40% of rental revenue. The nascent strategy, which allows retailers to obtain more copies, is still being negotiated on a title-by-title basis.

Thus, rental volume is becoming just as important to the studios as unit sales. And it’s just as lucrative a revenue stream: Video sales generated $8.8 billion in 1998, with rental revenue right behind at $8.1 billion, according to Encino, CA-based Video Software Dealers Association. Film studios make about half their domestic revenue through videos, and only one-fourth from the box office, according to Adams Media Research, Carmel Valley, CA.

“Two years ago, people were talking about the death of the rental business. But revenue-sharing programs have changed that because they have rebuilt consumer satisfaction,” says Buena Vista Home Entertainment spokesperson Martin Blythe.

Buena Vista this month launches Talk About Movies, a summer-long “frequent-renter” program dangling prepaid phonecards from official partner AT&T. Consumers who rent six Buena Vista titles receive 30 free minutes; those who rent 18 get 120 minutes.

Avid renters shouldn’t have any problem earning at least a few minutes, since the list of eligible titles consist of such critically acclaimed or successful flicks as Enemy of the State, Life is Beautiful, Rushmore, Little Voice, She’s All That, and A Civil Action. Best Picture winner Shakespeare in Love could be added at a later date, according to a source.

“Studios benefit from the turn rate, so we now put our strongest emphasis on consumer marketing programs like this,” says Blythe. Sharing the rental revenue also provides a funding source “that enables us to pay for consumer promotions,” he adds.

Universal Studios Home Video goes the rental route for the first time this month with Universal Summer Stars, a program tying in 10 titles including blockbuster Patch Adams and Oscar winners Affliction and Gods and Monsters. Renters can enter a sweepstakes offering five grand prize trips to Universal Studios Escape in Orlando, 10 first-prize Panasonic DVD players, and thousands of other gifts each time they rent one of the videos. The offer is being pitched through a special trailer on the tapes and in-store. P-O-P and radio promotions will support. The overall effort is pegged at $12 million.

“The rental business has always been retail-driven, so we’ve been trying to promote so the retail base would buy,” says USHV senior vp-marketing Ken Graffeo, who inherited the program when he moved over from PolyGram Video in March. “Now, we’re becoming a lot more consumer-driven.”

Universal is still giving retailers some attention, of course, offering free buys of 30 percent to 50 percent depending on the strength of the title.

Although USHV is running Summer Stars without partners, the division is looking to establish a core promotions group, says Graffeo. “We want to focus on this going forward, because promo partners bring a tremendous value to a program.”

The directional change doesn’t mean that sales-targeting promos will go the way of Betamax, however, because studios want to make sure that $8.8 billion figure keeps climbing as well. Besides, inspiring rentals on a title-by-title basis would be a real tough sell.

“I don’t think you can do too many title-specific programs,” Blythe says. “The goal isn’t awareness [of a specific release], it’s to encourage consumers to rent a lot.”

Home-video marketing folks traditionally have had one thing on their minds: sales. Promotional programs were designed to drive sales to rental outlets or directly to consumers. But the revenue-sharing paradigm now permeating the rental market has movie studios just as interested as Viacom in making it a Blockbuster Night.

Revenue sharing started coming into vogue last year, when market leader Blockbuster Video, Dallas, adopted it to address sagging profits. (Distributor Rentrak Corp. has been employing the strategy for more than 10 years.) Now, many retailers are negotiating deals in which studios drastically reduce the purchase price of titles – from $70-plus to less than $10 – in return for as much as 40% of rental revenue. The nascent strategy, which allows retailers to obtain more copies, is still being negotiated on a title-by-title basis.

Thus, rental volume is becoming just as important to the studios as unit sales. And it’s just as lucrative a revenue stream: Video sales generated $8.8 billion in 1998, with rental revenue right behind at $8.1 billion, according to Encino, CA-based Video Software Dealers Association. Film studios make about half their domestic revenue through videos, and only one-fourth from the box office, according to Adams Media Research, Carmel Valley, CA.