LOS ANGELES — As the saying goes, "if you can't beat 'em, join 'em." Taking a tip from its rivals in the videodisc business and employing what is commonly referred to as a "razors and blades" marketing strategy, Pioneer Video has been enjoying a sharp upward surge in the sales of its laser optical player units and discs since mid-summer. The catalyst for this sales spree has been a program running since August at a number of Pioneer Video dealers across the country, such as Southern California's Federated chain, which has allowed retailers to heavily discount its VP-1000 player to as little as $349, in order to promote its software.
According to Pioneer Video president Ken Kai, the company has seen a tremendous influx of new titles since June, which he also attributes directly to the turnaround in the company's and the laserdisc system's fortunes.
"We switched our marketing philosophy to more of a software-oriented approach," said Kai in a Cash Box interview last week, "and we introduced our new LD-1100 high-end videodisc player."
Perhaps most importantly, though, Pioneer now has "a good supply of laserdisc titles, including CX-encoded product," he noted, stressing a buildup of music programming.
Commenting on what was a dearth of software for his system when compared to that available for RCA SelectaVision's, Kai said, "Maybe I was in the business two years too early.
"Now, the quality of software is stabilized and with 25 new titles coming out every month, the laserdisc system is beginning to look very real in many peoples' eyes."
Of the August promotion, which is still running at a number of outlets, Kai said, "We offered the same program to every Pioneer Video retailer." He pointed out that setting the price on the VP-1000, which carries a suggested list of $749, was left up to the individual dealer, with the result that some chains, like Federated, opted to offer the player for $388 with the discs remaining at full price, while others, such as the national Video Concepts web, held the player at $699 but included 10 free laserdiscs.
(Under the terms of the program, a Pioneer spokesman said the company is offering the VP-1000 at "normal dealer cost" along with the added bonus of free remote control and 10 free laserdiscs. "What many dealers are doing is putting the remote control on the shelf and the discs in the bin at full price and selling the player at a discount," the spokesman suggested. "The program allows the dealer to decide what he wants to do and be creative.'')
"Price isn't of high concern to me," said Kai, who added that Pioneer nonetheless started the program because "we realize that the videodisc is still a price-sensitive product.
"I don't get into (pricing)," emphasized Kai. "That's something we can't control. If you begin to involve yourself in that, it raises the question of anti-trust. Under the program, (retailers) can price as they please . . . They can price (the VP-1000 player) higher and not offer any hardware and make more money if they want. The whole idea, though, is to stimulate software sales."
Those stores that have offered the player at the low price of under $400 have seen a phenomenal boost in sales. Wilfred Schwartz, chairman of the 16-store Federated chain, for example, told Cash Box that 650 machines were moved "during the advertising period" of the program, along with an average of "four or five discs per player." Federated, according to Kai and others, is not an isolated example, either.
"The VP-1000 is being blown out all over the city," said Peggy Morris of Hollywood, Calif.'s Cassette Craft Unlimited.
"It's not only happening in Southern California, but all over the country," Kai pointed out, noting that among those dealers and chains running, or set to run with the program are Fedco, Macy's San Francisco, Sound of Music and Schaak Electronics in Minneapolls/St. Paul, most recently Pacific Stereo and others in Miami, Detroit, Chicago and most major markets.
"Most retailers are setting a $599 price on the player and including a few free discs," said Kai.
While Pioneer is "continuing to advertise - in such consumer publications as Video, Video Review, Stereo Review, High Fidelity and the New Yorker" according to Kai, the thrust of its ad effort is "still aimed at the audiophile and videophile and not the general consumer" at this point.
"The day will eventually come when we spend money in, say, Playboy and Penthouse," he stated. "Our advertising may not be splashy, but for now we're satisfied with what we're doing."
Kai stressed that Pioneer is spending its money "in a different area" — namely, software. "If we're going to deliver one more program under Pioneer Artists, or come up with a music video demonstration disc for the retailer, that's more important and, I feel, better for us than advertising. We're spending money, nonetheless, but in an area where we feel it is more effective at this point in our corporate life."
Lots Of Music
Pointing proudly to the variety of stereo music and CX-encoded programming already released through Pioneer Artists and Pioneer Video Imports, Kai noted, "We now have more than 35 different music titles, from operas such as Aida and The Tales of Hoffman to pop, rock, jazz and R&B from America, the Grateful Dead, Melissa Manchester, Grover Washington, Jr., The Tubes, Kenny Loggins, Bob Marley, Maze, and Joni Mitchell, among others. Coming in our fall catalog are Swan Lake, La Boheme, the Nutcracker, Manhattan Transfer, Victor Borge, the Doobie Brothers, Little River Band and many, many more."
Although Kai admits that Pioneer trails RCA SelectaVision and the CED camp by "three months or so" in the quantity of programming available (he estimated that the company would have more than 300 titles by Christmas while RCA expects to have nearly 400 on the market), he added confidently that "no one label in any field is going to come out with the variety of programming we have now.
"Title for title, we have more music," Kai claimed. "If you care about stereo music, you have to come to the Laservision camp." Kai was quick to note that "although Pioneer Artists gives us enough reason to be happy with our software situation, we're also getting good support from the major studios."
"Star Wars was introduced and that's done extremely well for us and now Star Trek II is coming," said Kai, who added that he is "hoping E.T. will be out before the end of the year." (On the release of E.T., Kai stated that the date "totally depends on MCA," although he said the company has asked Pioneer to list the blockbuster title in both its summer and soon-to-be-available fall catalogs, which he likes to refer to as "the Schwann listing of laserdisc titles . . . because we care about its accuracy.")
The problems that Pioneer had initially encountered in trying to press a number of R-rated titles at its Kofu plant in Japan (Kai said that "some 30 titles"' were refused by the Japanese government) were cleared up along with quality control difficulties experienced by DiscoVision Associates (DVA) when Pioneer bought the Carson, Calif, plant from the latter, instituted stringent clean room standards and began pressing again domestically.
"Our (disc) yield is up 90% now and defectives have been cut to a fraction of what they were," said Kai. "The titles which could not be produced in Japan were all completed in Carson."
A stickier problem for Pioneer has been the issue of producing X-rated disc titles. Kai told the audience at the International Tape/Disc Assn. 1982 Update conference in San Diego earlier this year that the company was planning to go ahead with custom pressing porno; however, Pioneer had to be "very, very careful," according to Kai, not to set itself up as a censor in deciding which material to replicate and which to turn down.
"Naturally, we were concerned," Kai stated, carefully choosing his words. "I can't apply my moral standards or the moral standards of anyone employed by Pioneer Video to what we do and do not produce."
Now, that problem is being resolved by Pioneer in setting up what Kai called a "community standards committee" in California composed of people from various walks of life selected by community leaders and members of prominent civic groups "such as the Kiwanis and Rotary Clubs."
"They will submit the names of candidates from various social backgrounds and professions for the committee and, from those, 20 to 40 people will be chosen to sit on the committee," said Kai, who noted that the selection process has been taking place throughout September and a full committee should be ready by the end of the month. "We will pay these people to view the films submitted to us by independent adult movie producers, although by paying them we certainly don't want to influence their selections. Their names and opinions, of course, will be kept confidential, but we'll be using those opinions as the basis for what we decide to produce."
Once the committee gets underway, Kai said that he hopes to actually begin manufacturing X-rated material in "November or December" for an anticipated January release.
"We just have to make sure that everything is done in an absolutely legal manner," said Kai.
This new burst of activity surrounding the Pioneer camp, which also includes two new Foresight component video systems — the $3,000 model 7000 set with 25 inch color monitor and the $2,350 model 5000 with a 19 inch color monitor — to compete head on with Sony's Profeel line, has, in Kai's words "restored the original belief many people had in the system and is rapidly building confidence among the skeptical." And going back to his philosophy, Kai once again emphasized that software is the key.
"Programming is the most important element, perhaps the only thing, which gives justification for the consumer to even think about a videodisc system. I can say confidently that we have that programming now . . . and so much more."