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NY Times, 9/13/81

For Art Morowitz, the introduction of the video-cassette player prompted another sort of entrepreneurial effort, in which hard-core films have played a progressively smaller role. Like Mr. Sumner, Mr. Morowitz, a tall, curly-haired man of 38, had spent most of his career in the adult-film industry. He began in the 1960's by producing and distributing X-rated feature films. Later, Mr. Morowitz bought a theater chain - mostly adult theaters. In July 1978, a colleague in California gave him an armful of X-rated films on video cassettes and asked Mr. Morowitz to see how they sold in the lobby of one of his theaters. The first week, Mr. Morowitz sold five of them at $99.50 each.

''I realized very quickly that I was on the threshold of an important emerging technology,'' said Mr. Morowitz, sitting behind the desk in his sparsely furnished Manhattan office and wearing a conservative three-piece suit. In 1979, Mr. Morowitz opened Video Shack next to an adult theater at 49th Street and Broadway in Manhattan. It was the first retail establishment devoted entirely to video cassettes, and it was an immediate success. Mr. Morowitz quickly expanded into more prestigious locations - one on Manhattan's Upper East Side, and more recently in suburban shopping centers, including the one in Carle Place and others in Paramus, N.J., and Scarsdale, N.Y. At first, X-rated films accounted for most of Video Shack's revenues.