The U.S. children’s video market surpassed the US$3-billion mark at retail in 1996, according to Packaged Facts, a New York-based market research firm.

The sell-through channel has grown the fastest over the past five years, growing 55 percent from US$925 million in 1992 to US$2.6 billion in retail value in 1996. The rental sector grew about nine percent over the same period, from US$398 million to US$435 million.

Packaged Facts suggests that sell-through’s relative strength is due, in part, to the fact that consumers perceive the purchase of kidvid as a better value.

Packaged Facts estimates that children’s video retail dollar sales will reach more than US$4.2 billion in the year 2001, with sell-through at US$3.8 billion and rental growing to US$490 million.

Sell-through will continue to drive the growth in children’s video as the number of baby boomers who have become parents reaches its peak. ‘Raised on television, boomer parents are media aware and see kidvid as a way to monitor family viewing habits,’ according to the Packaged Facts study, The Children’s Video Market, July 1997.

Although Packaged Facts sees continued strength in the children’s home video market, the study notes that the end consumersÑkidsÑare not a growing sector. The U.S Bureau of the Census projects that children in the age range from infancy through 14 yearsÑnow numbering 58 millionÑwill grow by less than one million over the next five years, reaching 59 million in 2002. The number is expected to retreat slightly by the year 2007.

While entertainment companies may have varying definitions of what ‘branding’ means, all marketing companies practise some form of branding, the study says.

Marketers of children’s video spent some US$75 million in media spending in print and electronic media in 1996.

The study also notes that children’s video marketers rely heavily on promotions, including rebates, couponing, added value (in-pack premiums or extra video footage), merchandise offers, sweepstakes and mall tours. And many of these promotions tie in with consumer products, some of them adult products such as toiletries.

According to the study, retailers are avoiding middlemen and buying video products direct from marketers. Larger retailers are more likely to buy direct, with product often being shipped to the retailers’ central warehouses.

Packaged Facts also found that retailers’ average gross profit margin on children’s video is relatively high for a mass-marketed consumer product, with many retailers reporting sell-through margins of 40 to 50 percent.

Margins are frequently lower in discount outlets, including warehouse clubs. These high-volume retailers frequently select titles to be loss leaders as a means of building store traffic.

Discounters remain the dominant outlet for kidvid purchases, accounting for an estimated 47 percent of sell-through dollars in 1996, according to the study. Drugstores and grocery outlets are credited with 16 and 14 percent respectively.