Rental Price Increase on the Horizon : Videocassettes: Retailers fear hike will scare away consumers, but they’ll do it anyway.

For consumers, the most important news to come out of the Video Software Dealers Assn. convention, a four-day affair that ended Wednesday, is that a rental price increase is inevitable.

Some retailers had come to the annual home-video industry gathering in Las Vegas hoping that some manufacturers might announce their intention not to raise prices.

Just wishful thinking, it turned out.

Nothing that happened at the convention indicated there will be a lid on the wholesale price rises that have been plaguing retailers, which means rental prices most certainly will be creeping up by the end of the year.

“With the country facing a recession, the fastest way to lose customers is to hit them with a price rise,� said convention chairman Mitch Lowe, a retailer from Mill Valley, Calif. “But many retailers won’t have a choice.�

Early this year, a new standard retail price for rental titles surfaced: $92.95, up from last year’s $89.95. But retailers fear that Paramount’s $100 for “The Hunt for Red October�--due out in October--will trigger an even higher standard.

With the retailers faced with higher inventory costs, the ultimate loser is the consumer, insisted retailer Brad Burnside of Video Adventure in Evanston, Ill.

“The retailer could pass the higher costs on to the consumer in terms of a higher rental rate, so the consumer loses there,� he suggested. “The retailer can eat the higher cost, but that means he can’t afford to buy as many copies of that hot new title. The consumer loses there too because he can’t get the rental he wants when he wants it.

“Or the retailer could deal with higher wholesale costs by not buying as many smaller titles--like travel videos or opera videos. But the customer loses there too because he has fewer choices and he loses out on experiencing what some of these special-interest videos have to offer. One thing you see at a convention like this is an incredible variety of videos. But as wholesale prices go up, retailers just can’t afford to stock these videos.�

Apparently, it’s the small independent retailers--who make up the bulk of the association--who’re going to be hit hardest. “A lot of the small stores won’t be able to survive this price rise,� convention chairman Lowe predicted.

RENTAL STUDY: A study by the research firm Paul Kagan Associates, commissioned by the Video Software Dealers Assn. and unveiled at the convention, confirmed that the growth rate in cassette rentals has slowed. The rate is projected to be 9.4% this year, slipping to 8.5% next year and dipping to 6.6% in 1992.

The rental business is still growing--with revenues up 11% in the first quarter this year. And the study indicated that retailers’ big worry wasn’t lack of interest from renters but rising costs. Their per-cassette costs have risen each year since 1987, which erode profit margins.

LASERDISC: Pioneer, Image and Sony, leading proponents of the laserdisc format, had prominent exhibits, all geared to convincing video-minded retailers--particularly those in the Midwest--to stock laser software. Explained a Sony executive: “Most retailers are afraid of laserdiscs. They need a lot of education about the format.�

Laser boosters were buzzing about a recent hardware announcement that should increase the format’s national profile. Next month, Radio Shack will market the MD-1000, a $500 combination unit that plays five sizes of discs--including CDs and 12-inch laserdiscs. Exposure in this national electronics chain will introduce the format to legions of consumers--particularly in small cities--who now know little about it.

“TRACY� AND “PRETTY WOMAN�: Disney’s Bill Mechanic, president of theatrical distribution and worldwide video, said at the convention that, contrary to pre-convention rumors, there were no plans to release “Dick Tracy� on video soon. The company wants to give it more time in theaters to gather more marketing information. Since the company is releasing “Pretty Woman� Oct. 19, it’s unlikely to put out a competing blockbuster in the Christmas market.

At $19.99, “Pretty Woman� is being geared to the big discount stores, which will probably sell it as low as $15. Traditionally, though, such stores prefer to market G and PG titles, not R-rated movies like “Pretty Woman.� Earlier this year, Warner had trouble selling the violent, R-rated “Lethal Weapon 2�--priced for the sales market--to discount stores.

Mechanic, though, said he expected no resistance to stocking “Pretty Woman,� a romantic, Cinderella-type story with, he insisted, only one scene that takes it out of the PG category.