NEW YORK — Andre Blay, whose innovative idea of marketing Hollywood movies on videocassettes sparked an entertainment industry bonanza and a revolution in television viewing, died Aug. 24 in Bonita Springs, Fla. He was 81.
The cause was complications of pneumonia, his son, Robert, said.
Once Hollywood studios, moviegoers, and couch potatoes began catching on to the phenomenon in the late 1970s, Mr. Blay’s merchandising breakthrough created a new revenue stream that helped revive the film industry.
It also created a vast market for goods ranging from video recorders to the obligatory popcorn that viewers could microwave at home.
The relatively high initial retail price of movies on videocassettes also prompted an unexpected proliferation of video rental stores, from neighborhood businesses to sprawling chains like Blockbuster.
Mr. Blay, in effect, redefined the term “home movie” with a product that lasted just long enough to make him a multimillionaire.
Before he came along, the studios had licensed miniversions of their movies — about 20 minutes’ worth — on 8-milimeter film. The technology for making longer recordings was still primitive.
“If they can make $40 million doing that,” Mr. Blay recalled thinking, “we can make a hell of a lot more selling the full version.”
In 1966, he helped found Stereodyne, the nation’s first successful audiocassette and eight-track duplication company, in Troy, Mich. Three years later, in Farmington Hills, Mich., a suburb of Detroit, he started Magnetic Video Corp., which, like Stereodyne, produced tapes for corporate customers.
It was in the late 1970s that Mr. Blay began pitching the major studios on the idea of putting full-length movies on videocassettes. Initially there were no takers.
About only 1 percent of American households owned videocassette recorders at the time, and the studios, more concerned with the potential for piracy than for profits, were reluctant to license their movies for mass duplication.
Indeed, as late as 1982 Jack Valenti, president of the Motion Picture Association of America, told Congress, “The VCR is to the American film producer and the American public as the Boston strangler is to the woman home alone.”
But in 1977, Mr. Blay was able to persuade Fox to make a deal under which Magnetic Video would duplicate and distribute 50 of the studio’s most successful films, including “M.A.S.H” and “The French Connection.” For his part, he would pay $300,000 up front (about $1.3 million in today’s dollars) plus $500,000 annually and a $7.50 royalty on each title sold.
He did not have the field to himself for long, but he made the most of being first. He went on to establish a new video duplication operation, advertised in TV Guide, and created the direct-mail Video Club of America. After joining for $10, subscribers could buy a movie for under $50, about half the going retail price in stores.
As the price of recorders plummeted to about $500 from about $1,000, sales boomed, and so, to some people’s surprise, did rentals.
Fox bought Magnetic Video in 1979 for an estimated $7.5 million (more than $27 million today) and named Mr. Blay the chief executive of 20th Century Fox Video.
“Some people say VCRs are no more than a toy, and that the fascination will fade,” Richard Smith, the executive vice president of Playboy Enterprises, said in 1985. “When I hear that a quarter of all households with TVs also have VCRs, I think this is a permanent change that will affect us.”
While illegal copying did become a challenge for the industry, by 1987 home video was generating more revenue than movie-theater ticket sales.
In announcing a 2012 retrospective on the VHS revolution, the Museum of Art and Design in New York said that videocassettes had “fostered the expansion of cinema into new aspects of daily life, resulting in an explosion of new cinematic genres and techniques, the video store, and an impressive increase in audiences.”
“This new source of funding,” the museum noted, “also eventually supported the rise of the American independent film market.”
Mr. Blay was inducted into the Consumer Electronics Association Hall of Fame for having “sparked a retail revolution as hundreds of mom-and-pop video and rental sales stores popped up in every community in America.”
Eventually competition from other companies, piracy, the development of DVDs and satellite, and Internet transmission of movies to homes eroded Mr. Blay’s market share and profits (and virtually wiped out the video rental industry). The VHS was relegated to an almost obsolete cultural artifact. Mr. Blay moved into making his own movies instead of copying those of others.
In 1981, he formed his own video software company, which he sold the next year to Embassy Communications. He became chief executive of Embassy Home Entertainment and also oversaw the production of films including “Sid and Nancy” (1986) — about the punk-rocker Sid Vicious and his girlfriend Nancy Spungen — “The Princess Bride” (1987), and “Hope and Glory” (1987).
After leaving Embassy, he formed Palisades Entertainment Group with Elliott Kastner. The company produced “Prince of Darkness” (1987), “The Blob” (1988), and “Village of the Damned” (1995).
Andre Alvin Bray was born on July 27, 1937, in Mount Clemens, Mich., to Robert Bray, a factory manager, and Agnes (Zuehlke) Bray, a homemaker.
He graduated with a bachelor’s degree in 1959 from Michigan State University and later earned a master’s in business administration there.
In addition to his son, Mr. Blay, who lived in Bonita Springs, is survived by his wife, Nancy (Fleming) Blay; a daughter, Cynthia Maxsimic; and five grandchildren.
In 2010 he was the author of a book, “Prerecorded History.”