Home video rights to two of the richest film libraries in Hollywood, those of RKO and United Artists, are in the process of changing hands, which will affect the prices and packages of some favorite old movies -- and in some cases, the way the movies look on the screen.

The first difference that will be noticed involves the UA collection, which for years has been marketed on tape by CBS/Fox Video through a licensing arrangement that expires on New Year's Day. After that, CBS/Fox will be unable to sell any more of its United Artists movies, although distributors and retailers are free to sell off any inventories on hand. MGM/UA Home Video, the recipient of the library, will start marketing some of the collection next month in a promotion involving eight films each priced at $19.95. Seven are already on tape at higher prices from CBS/Fox: "West Side Story," "Raging Bull," "The Magnificent Seven," "WarGames," "Thief," "In the Heat of the Night" and "The Apartment," which hasn't been reissued since its initial 1982 video release; the eighth, "Midnight Cowboy," is an MGM/UA title.

The fate of the RKO video library is less certain. Last week it was sold to Ted Turner's Turner Entertainment to help fund a management buyout of RKO pictures. Turner is most interested in using "King Kong," "Citizen Kane," the Astaire-Rogers series and other RKO gems for his cable and syndication enterprises -- the same markets he had in mind for the MGM library, which is all he held on to after buying that studio and selling most of it off last year. In the case of MGM, Turner licensed home video rights back to MGM/UA Home Video; with RKO, Turner reportedly is considering marketing the tapes through the Turner Home Entertainment division, although it may license the movies outside. Wherever they land, one thing is certain: Turner thinks they're worth more in color and is likely to have Fred, Ginger and others dancing through the colorization computers.

New World's Commercial Appeal

The horror comedy "House II" arrives from New World Video this week, and viewers who rent it from Erol's Video Club are in for a surprise: a direct response offer for "House II" T-shirts, sweat clothes and other apparel. The "Watch and Wear" offer -- to be seen only on tapes sold to Erol's -- is made in two commercial messages on the tape. The first, a 15-second "teaser" before the feature, depicts a gravedigger who dares the viewer to stay tuned for the special offer at the end of the tape. The later promotion starts in split screen during the end credits and continues for three minutes after the movie.

The idea of customizing video advertising for a specific retailer is unprecedented, as is the on-tape exposure for the chain: The Erol's logo appears on the tape right after New World's. David Pierce, New World's sales and marketing vice president, says the presentation is designed to highlight the retailer's role. Once the chain logo appears, he says, "the tape becomes an Erol's movie to the customer."

It also becomes a vehicle for what Pierce calls "on-pack" advertising -- commercial messages placed on the cassette -- which he believes will become more common. "On-pack advertising promotion is a reality," says Pierce. "It's going to happen. The 'Top Gun'-Diet Pepsi connection was a steppingstone to what is going to happen in the future on videocassettes." That Diet Pepsi ad, in his opinion, represented "the perfect marriage of product, presentation and the film itself."

With that in mind, the "Watch and Wear" pitch has been designed to be as unobtrusive as possible by echoing the campy, spooky style of the movie and by splitting the message into two parts. "We didn't want to offend the consumer with a commercial at the front end of the film," he says. "We're trying to protect the integrity of the videocassette." The prefeature teaser, short as it is, "isn't going to offend anyone." And the commercial itself? "If anything it's going to entertain people a little bit. If they don't buy anything, at least they'll chuckle. Hopefully they'll chuckle and buy."

'Platoon': To the Trenches

"Platoon" will not be home for the holidays. Settlement negotiations between Vestron and HBO Video have broken down, and now Vestron is pledging it will "vigorously pursue" the matter through the courts. The announcement came as a surprise after indications last week that talks were nearing a more constructive conclusion; at one point, Vestron notified key retail and distributor accounts that the tape would most likely hit stores before Christmas. Since Vestron has yet to receive a print of the movie, the narrow time frame suggests that Vestron would have been content to market copies of the tape that HBO had manufactured and presold before the injunction delayed its arrival in stores two months ago; neither side is talking about what it is and is not willing to do.