Case Study #3: Direct Cinema Limited
Direct Cinema Limited, founded in 1974 as an educational media distributor, has been selling home videos since the mid-1980s. In the past five years, they have expanded their home video collection to more than 200 titles; and the company's sales ratio is now 55% to the educational market and 45% to the consumer market.
In the past, Direct Cinema would look for titles that could sell 200-300 units to educational institutions. They are now increasingly interested in videos that have a modest educational market but can sell 3,000-5,000 units to consumers. Titles range from videos on well-known artists (Frank Lloyd Wright, the American Expressionistic painters) to military history (D-Day Remembered, Men of Bronze) to religion and spirituality (The Way of Myth, The Women and Spirituality Series). According to Mitchell Block, president, the company also has some titles that have sold more than 5,000 units in both markets, notably the animated classic The Man Who Planted Trees. In spite of the focus on home video, Direct Cinema still considers the educational market significant. Its tiered pricing structure reflects this. Videos that will reach only the college market are priced from $150 to $350; home videos are priced from $15.95 to $39.95 for consumers and $95 for institutions.
Direct Cinema reaches the consumer market mostly through retail and specialty catalogs. They sell to retail directly; staff members handle sales, open new accounts and provide service to the video, book and high-end specialty stores that are their major retail clients. Direct Cinema focuses on site-specific retail outlets such as museum bookstores and gift stores at parks and national historical sites, with themes matching their videos. For example, they sell videos of the Academy Award® winning short documentary One Survivor Remembers at the U.S. Holocaust Museum bookstore in Washington, DC; a video on American sculptor Augustus Saint-Gaudens at the museum devoted to the artist; and Ric Bums's historical documentary, The Donner Party, at the Donner Memorial State Park giftshop. [A substantial number of Direct Cinema titles are Oscar® nominees and winners in the short and feature documentary categories.] Selling to retail this way is time- and labor-intensive and can be frustrating, according to Block. "You have to convince the stores that your tapes will sell, be there when they return your calls, deal with exchanges and returns—and then they might buy only two copies." To prove their videos will spark consumer interest, Direct Cinema has placed ready-made displays in stores at their own expense; to keep the stores interested, they must continuously "hand-sell" their product line. And, with each new title, new retail outlets must be found that match the video's special interest market.
For all the time and expense, this remains one of the best ways for small companies without the resources of mass market distributors to reach consumers directly, according to Block. And it can pay off. Direct Cinema now has its videos in more than 100 bookstores, including the chains Learningsmith and Barnes & Noble, as well as in independent book stores, including some specializing in African-American, women's and regional themes. Orders can range from 10 videos a year to 50 or 100 per store. Even orders from smaller clients add up and the site specific outlets often order continuously over many years.
Block believes that the vast majority of video stores in the U.S. aren't interested in independent or alternative videos because they require work and training to sell. Direct Cinema does not expend much effort to sell to the large video rental chains. Although they have occasionally placed titles into some supermarket/K-Mart outlets, they face an uphill battle to get these stores to consider titles that do not have broad mainstream appeal. Direct Cinema also makes use of specialty catalogs to sell videos to the consumer and educational markets. Videos in the educationally-oriented catalogs (e.g., Social Studies School Services and Insight Media) do not sell in great numbers, but titles remain in the catalogs for a number of years. The specialty consumer-video catalogs, on the other hand (e.g., Signals), have sometimes moved as many as 1,000 units of Direct Cinema's videos, but these tend to want new product all the time. This is a problem for "evergreen" titles, which sell consistently over time but may get dropped if they do not sell large numbers in the short term.
The Women and Spirituality Series, which Direct Cinema distributes in this country, is an example of the kind of work and strategizing that goes into marketing specialty independent videos today. The series is actually three separate titles (Goddess Remembered, The Burning Times and Full Circle) produced in Canada by the National Film Board. The documentaries follow producer/narrator Donna Read and her female crew on an exploration of the emerging women's spirituality movement in North America .
When Direct Cinema began selling the films to the educational market, it was unclear whether the series would have a consumer market. Then, as the filmmaker began to lecture on the subject around the country, phone calls came in from women asking to buy the tapes for themselves. Direct Cinema agreed to make them available in home video at $34.95 per tape. Once it was clear there was consumer interest, Direct Cinema began to market seriously. They mailed to groups dealing with women's spirituality and took out advertisements in publications with spiritual themes, such as Parabola and Women and Spirit, and in publications that are sold in lesbian and feminist bookstores. As distribution built, the Film Board syndicated the series and sold it to U.S. public television stations themselves, market by market. Direct Cinema called every station that signed on and offered the series as a premium for viewers who pledged. This strategy proved so successful—2,000 units were sold this way—that the Film Board decided to take back the rights to sell the videos themselves.
The videos continue to sell well to the educational market. Direct Cinema maintains tiered pricing for the series: $95 for consumers , $250 for public libraries and $350 for universities. Consumer distribution has continued to be "very grassroots—a lot of word-of-mouth that builds every year," says Block. Direct Cinema spends a lot of time dealing with the public, answering individual letters and phone calls, and servicing the smaller feminist bookstores, some of which buy only this title from them. Block is not especially optimistic about the future of specialty home video, particularly for most independently made documentaries. He cites several reasons. Home video sell-through prices are low and margins extremely tight; and it takes tremendous effort and resources to find new retail accounts for niche markets.
Cable channels like A&E have increased the competition with the multitude of documentaries they produce and sell on-air. At the same time, independent distributors find it harder to sell their videos on-air through public television.
Nevertheless, Block is excited about some aspects of the future—especially the possibility of selling videos over the Internet. Direct Cinema has experimented with reaching niche markets this way, with some notable success. Recently, producers of a Direct Cinema title on schizophrenia, I 'm Still Here, linked their website to the website of the National Association of the Mentally Ill. They describe the film and offer it to individuals for $19.95. With no other promotion, Direct Cinema has been selling one to two copies a day to individuals who log onto the NAMI site and discover the video. In another example, filmmaker Robert Drew posted a listing about his video The Sunship Game on an Internet bulletin board for glider enthusiasts. The film, a documentary from the 1960s about a glider competition, is considered a classic among those in the glider world, but none of them knew where to buy it. In two weeks, from the one posting, Direct Cinema sold more than 50 units at $34.95.