April 22nd, 2006
Can’t Beat Pirates? Compete With ‘Em, Says Warner Home Video
By Michael Santo
Contributing Writer, RealTechNews
It’s not a “Can’t beat ‘em? Join ‘em” scenario but it’s pretty close. In a move that will most likely anger DVD buyers in markets such as the U.S. and Europe, Warner Home Video is trying to compete with film pirates in China as they launch a trial program. The Aviator, sans all the normal packaging, is available for the equivalent of U.S. $1.50.
The “simple pack” edition of the Oscar-winning epic, which comes in a cardboard folder rather than the standard DVD plastic box, went on sale earlier this month in selected Chinese cities, said Christine Hu, CAV Warner public relations manager.
“This is a first step to see if the consumer can accept this product at this price,” Ms Hu said, adding that it was too early to judge the results of the experiment. Source: MSNBC
We Say: Hey, if it’s a question of the plastic DVD case costing me the extra $10 - 20 that I would pay for this video in the U.S. (depending on where I get it), sell it to me without it. I mean, half the time I replace the case with a better one (aftermarket) anyway. As far as the quote in the article of “a move likely to anger consumers in developed markets”, they’ve already got one such angry consumer — me.
David Johnston says:
They wouldn’t be doing this unless they were still making money off of selling the discs for $1.50. That’s something to think about. I’m all for companies making a profit, but when you can still be profitable selling a product for 1/10 (or less) of the price you’re selling it to others, that’s another story.
April 22nd, 2006 at 7:50 am
Cheese Toast says:
Why bother selling them here? We will continue to spend absurd amounts on DVD’s and movie tickets. Plus with the MPAA & RIAA sueing little billy and sally for piracy because they downloaded the latest Harry Potter movie and newest Ashlee Simpson CD from P2P (only to find out that the movie looks like crap and the cd has skips on every track). There is a reason renting is popular, how many of us really watch the movies more than once anyways.
April 22nd, 2006 at 8:56 am
MarcosV says:
If sending pirated goods to the US is profitable, I don’t see how this move will do anything beneficial to solving the piracy issue.
April 22nd, 2006 at 9:05 am
Kevin K. says:
It’s all about money. We, the consumer, have no real knowledge of the absolute cost of anything we buy and this is a prime example. If the motion picture industry can make a profit by selling DVDs for $1.50 then they could easily do so here but don’t just for the money because we are stupid and willing to spend the riduculous amounts we do on their product.
Same is true of just about anything we buy or so it would seem. Why do jewelry stores sell watched for $2000 when internet retailers sell them at a substantial discount? Collusion and price fixing between the manufacturers and retailers yet we still buy these items.
Sunglasses? Books? Pens? Coffee? Socks? It’s all the same…. Why is a pair of underwear $6 at Macy’s when it’s made in China for pennies? Ugh!
Rich get richer and we keep giving them our money!
April 22nd, 2006 at 10:22 am
Kevin K. says:
I meant WATCHES, not “watched”….. Ugh.
April 22nd, 2006 at 10:23 am
Jimmy says:
So now we will have chines pirates who just need to make copies of the packaging from the us and then sell them back to us for about 10 bucks apiece.
April 22nd, 2006 at 10:28 am
Jeremy S says:
Yes, they’re greedy, but it’s also normal economics here. Sure they sell for $10 or more here on average, but the cost of making the movies can be pretty high as well. When you bring overseas markets into account, the studios just want *some* money.
Making DVDs costs just pennies, and I’m sure the cardboard packaging is probably similar. The plastic cases we have in the US and Europe don’t actually constitute the markup, what constitutes it in their eyes is the cost of living and etc.
It’s not fair, but it’s not the first time that an industry has sold products at different prices in different regions (look at gas prices for example). It’s all about where you have to price it to get maximum profit in the region.
April 22nd, 2006 at 12:32 pm
John says:
“Sunglasses? Books? Pens? Coffee? Socks? It’s all the same…. Why is a pair of underwear $6 at Macy’s when it’s made in China for pennies? Ugh!”
Its called a storefront. You have to pay for the store to carry the product. That store has overhead far exceeding internet sites.
April 22nd, 2006 at 12:49 pm
sam says:
a dvd costs about 10 to 20 dollar cents to produce, packaging 10 to 40 cents. adding other costs, i reckon it would cost 60 dollar cents to bring to the market in china(in 10 cent package) and about 120 dollar cents in europe/america(in 30 cent package). So basically these companies rob the western consumers in broad daylight!
Looking from another angle, ratio of per capita incomes for US/china = 42000/6300=6.6 . Ratio of DVD prices 25/1.5 = 16.6. NOOO! even considering the chinese earn less, this is far too cheap for them……
April 22nd, 2006 at 12:51 pm
d says:
How much does shipping from China cost (incl. customs and import taxes?)
April 22nd, 2006 at 12:52 pm
Doog says:
Kevin K. wasn’t kidding about collusion and price fixing, but sometimes the stores really don’t have a choice. The grocery I work at was selling certain foods cheaper than all the other stores, so when our supplier came in and was looking at our inventory they told us we have to raise our prices because we’re selling them too cheap. We were still making profit off of it, but we had to raise it regardless.
April 22nd, 2006 at 12:58 pm
John S. says:
Two points:
1) This is the necessary result of Intellectual Property laws - their whole point is to allow companies to raise their prices artificially by granting a monopoly. Maybe this is a worthwhile price to pay for an intellectual property regime, but it’s a price that must be paid.
2) About absolute cost: First, manufacturing costs are but a small fraction of the cost of doing business. The price of any of the items listed must also cover marketing, taxes, design/research & development, the cost of failed product lines, etc…
Second, making the jump from “some people charge higher prices for the same goods than others” to collusion and price fixing is entirely unwarranted. In fact, the two are mutually exclusive - that internet retailers sell at such a discount is evidence that nothing of the sort is occurring. The real explanation is that prices are determined by both supply AND demand. “[W]e keep giving them our money” because, e.g., a pair of underwear at Macy’s is more valuable to us than $6. So what if it only “costs” Macy’s $2 to make underwear? We _value_ it at more than $6, or otherwise we wouldn’t buy it. They get money (which they value more than underwear), and we get underwear (which we value more than $6). Everyone wins.
April 22nd, 2006 at 12:59 pm
Me says:
Sam’s comment made absolutley no sense.
April 22nd, 2006 at 1:25 pm
Eric B says:
More accurately, Warner can sell pieces of plastic for $1.50 and make a profit.
However, such a move will only work because the western world has already subsidized the cost of the movie.
The one positive move of piracy is that eventually, it will force movie producers to find ways to cut costs out of the system. That’s bad news for actors and everyone in the movie chain, but good news for consumers.
April 22nd, 2006 at 1:27 pm
sam_a_lewis says:
“They wouldn’t be doing this unless they were still making money off of selling the discs for $1.50. That’s something to think about.”
Well, that is not quite a logical thought. You have to take into account of the population difference:
U.S.A. 298,444,215 (July 2006 est.)
China 1,313,973,713 (July 2006 est.)
The market is huge! Selling ten times the number of copies at a tenth of the price yields the same revenue. Plus, if you take into account the stranglehold the chinese govt. has on the entertainment industry…and how much piracy goes on now.
As for the person who asked how much it would be to ship a movie from China-I hope you know the language/know that it would be illegal. So, moral of the story: We will continue to pay 15-25 a movie for a long time to come.
April 22nd, 2006 at 1:27 pm
Atlas says:
I, for one, hope they make as much money as they can, even if it involves seemingly “unfair” prices for different regions. What would happen if we passed a law limiting all DVD prices to $1.50? Funding for new movies would disappear. Every penny these companies “rob” from us is more incentive to make another, better selling one. Greed isn’t evil–it’s motivation that no law can match. Bring on the collusion and price fixing. (btw, China DVD’s won’t work in your US players).
April 22nd, 2006 at 1:38 pm
David Johnston says:
How isn’t that a logical thought? They must be making a profit on both prices, otherwise they wouldn’t be selling them. I’m not saying that I think they should sell barely above the cost of the material cost of production. Of course there is a need to pay actors, etc. What I am saying is that the price difference here is 1000% or more, depending on where and when you buy in the US. That’s a *very large* amount of each DVD sale going to non-production costs: at least $10 per disc, but probably more. Considering how many people in the US and other places with similar prices for DVDs, that adds up to quite a lot of money. I think it’s funny that they are also now offering movie downloads, but still expect the consumer to pay the same price as s/he would for the DVD. Yeah, right!
From CinemaNow.com:
“1. How much does it cost to watch a movie?
All videos marked “Rent” are available for 24 hour viewing and are priced at $3.99 for new movies and $2.99 for older titles. There are also special discounts available in our Showcase Section. For titles marked “Buy”, the downloads are typically priced between $9.95 and $19.95. Please see the title’s details page for actual pricing.”
April 22nd, 2006 at 1:47 pm
Driller says:
The one thing noone has mentioned yet is that the bootleggers sell copies of movies that have just been released in theaters. How will the legit distributors mirror that?
April 22nd, 2006 at 1:52 pm
Tom D. says:
This is old hat for economists — it’s called Monopoly Pricing. A monopolist will try to sell its products for the most it can get each consumer to pay, so it varies the price based on the wealth of the customer. There is no market, and so no market price. Copyrights establish a monopoly (is it a form of property? Certainly not the usual kind!) — so we see $15.00 pricing in the wealthy U.S., $1.50 in much poorer regions such as China.
April 22nd, 2006 at 2:12 pm
Driller says:
I blame Bush!!!11!!!
April 22nd, 2006 at 2:14 pm
Taz says:
Although I understand the bitterness over such a move, consider that it costs far less to manufacture something in the far east than it does here in North America. Unions, skilled labour, taxes, licenses, etc all add up to the exhorbitant cost of manufacturing and marketing a product or service.
As a small business operator, these costs eat into our profitability as well, even more so as we don’t have the deep pockets that big corporations do. Want cheap prices? Take a pay cut at work and see how that goes over. (just kidding - but all things are relative)
April 22nd, 2006 at 2:57 pm
Adam says:
David Johnston said: “That’s a *very large* amount of each DVD sale going to non-production costs: at least $10 per disc (…) I think it’s funny that they are also now offering movie downloads, but still expect the consumer to pay the same price as s/he would for the DVD. Yeah, right!”
You know you answered your own question, right? The reason movie downloads are nearly the price of the DVD is because the packaging/materials are a small portion of the cost to produce the movie. Figure in somebody has to design, build and maintain the website, the delivery costs might be a wash. So it’s reasonable to charge similar prices. Isn’t it what iTunes does with music? It’s maybe a buck or two cheaper for a whole album, but it’s sure convenient and instant.
April 22nd, 2006 at 3:14 pm
Johnnykins says:
I know for a fact I would buy more movies and music if they were sold at lower prices, $4-5 for a DVD, $2-3 for an album…but instead, because of outrageous prices I’m forced to only buy the the product I absolutely love the most, and download everything else.
April 22nd, 2006 at 3:14 pm
Bunny says:
What annoys me personally is that this pricing hasn’t happened earlier and hasnt been offered worldwide.
American consumers may get mad that someone is getting something cheaper than they are, but for most countries and most goods the “rest of the world” have to pay far higher prices for goods than Americans do every day.
The best example is software. Most Americans would choke at paying the higher than the US price we have to pay for Adobe software (in US dollars). It gets worse when the currency exchange pushes a copy of Photoshop to three times the average weekly wage (New Zealand). Then look at your rebate schemes and specials, or rather the fine print on the offers. The fine print says “US residents only”. They never offer specials, or rebates in countries like New Zealand. Many countries are far worse off that New Zealand, but I use it as an example because it has a NO IMPORT DUTY scheme. Countries like the UK pay higher prices even though their exchange works in their favour. This is because of the heavy import duties their governments charge. Imagine living in the Ukraine and purchasing legitimate software.
So don’t get worked up about this. Most Americans pay far less for most goods than the rest of the world. Should the rest of the world get this angry because Americans pay in many cases a third for their petrol? Yes you may think your gas prices are high, but every time your prices go up, so to most other countries, and they go up further because of added taxes.
April 22nd, 2006 at 3:17 pm
David Johnston says:
Considering I refuse to buy music from iTunes, or any online store for that matter (because of the rip-off pricing), I don’t think I answered my own question as it relates to me as a consumer.
April 22nd, 2006 at 3:19 pm
Taylor says:
It costs 8 cents to make a DVD. 12 cents to make a case (Not sure about regular or cheap). That means its a 750% profit at $1.50. That seems like plenty of profit to me. Besides the fact that I will but anything that costs $1.50. That means I buy a whole lot more movies then I would. As of now, I only buy movies that I have already pirated to see it they are any good. Since most movies I would normaly buy apparently suck, thats a whole lot of money I would spend on the cheaper DVD’s.
April 22nd, 2006 at 3:21 pm
Adam says:
Well, no, to you individually the value of the money outweighs your percieved value of the movie/song… and that’s totally reasonable. I’m just saying it’s not so surprising that they charge the same for DVDs and downloads, because the distribution media is cheap either way. (But both may well be overpriced. Equally overpriced I guess.)
BTW, my DVD collection: very very small.
April 22nd, 2006 at 3:38 pm
Seth says:
Just because a DVD and packaging costs about 50 cents to produce doesn’t mean that is the only cost the manufacturer has to recoup. The movie on that DVD probably cost millions of dollars to make. Millions of dollars to market, to distribute, ect.
The reason they’re selling it so low in China is because the piracy is so rampant there, people simply will not buy an official version of the DVD because it costs much more than an illeagal version.
This is both an attempt to draw some more profit out of a place that gives little profit, and an attempt to make piracy less profitable to the pirates themselves by activly competing with them in the marketplace, hopefully leading to less piracy (and hence even more profits, and perhaps lower prices for the rest of us).
April 22nd, 2006 at 3:39 pm
anonymous coward says:
If you’re getting bad quality video and mp3’s that skip, you’re obviously not using bittorent
That said this has been going on in Asia for ages. I bought a full boxed retail version of “sands of time” for the equivalent of a few dollars from a concession stand inside a major mall in Bangkok. It was a propper shop selling the real thing dirt cheap. The manual is in Thai, but the game’s in English.
Same deal, people will buy it if it’s cheap enough otherwise they’ll pirate it.
April 22nd, 2006 at 3:40 pm
Fred Copy says:
If you don’t care about the plastic case, then get a program like DVD Cloner III and burn a rental.
April 22nd, 2006 at 3:43 pm
AmmonZenos says:
But let’s look into this at an economic standpoint.
To make a dvd costs under a dollar as mentioned before. So every DVD yields a few cents of income. One thing not mentioned throughout these comments is that the companies making these DVDs have to a couple million dollars to edit, quality control, etc., etc. to produce a final DVD copy for production (of course not as much money to produce a movie
, paying Julia Roberts is already $10+ million).
So after the initial expenditures for production, they will start to gain true profit after (let’s say) a few million DVDs are sold.
If the movie industry sold dvds for $1.50 to everyone and get $0.30 as profit, then they need to sell 3.3 million copies to earn $1 million. If they spend $4-5 million to make a DVD, then it’s going to take a lot of sales to break the $4-5 million mark to actually turn a profit.
So it is not feasible to sell DVDs for that cheap. But in China’s case, it is better to sell the DVDs for something, rather than not get the sale at all.
But I’m asian, so I have no qualms. I want those $1.50 DVDs here in America.
My two cents.
April 22nd, 2006 at 3:44 pm
John says:
@Tom D: No, it isn’t monopoly pricing, its price discrimination. Theoretically, monopoly pricing is price setting at Price = Marginal Revenue = Marginal Cost, which is profit maximizing. In this case, Warner are conducting price discriminastion, which is much as you describe the process, and intended to translate all consumer surplus into producer surplus. Although I grant this is usually a feature of monopoly markets. But thank you for playing.
April 22nd, 2006 at 3:54 pm
Cassandra says:
This type of thing just makes me want to but things from pirates rather than the companies that produced the DVDs. People can pay the same as I do … or I will find the product in a secondhand market for cheaper.
April 22nd, 2006 at 3:56 pm
lh says:
Ladies and gentelman it is quite simple. If you want these prices do not complain here. Go to your local walmart and ask…
They are one of the largest importers of goods from china. They will pressure thier vendor to make things cheaper.
April 22nd, 2006 at 5:09 pm
Rick says:
Also…the $15 or $20 is not profit for the movie companies. They make the dvd for say $.60….they sell it to the Distribution Company for $2.50…The Distribution Company sells it to Circuit City for $5….Circuit City sells it to you for $15 or $20.
Circuit City has to pay for the store…all the workers getting $7-$10 an hour… They need to keep 500 or so dvd’s on the shelves at all times so people have a selection…..how many DVD’s do you think they actually sell in one day? It can’t be that many. They need the markup to stay in business and make a profit.
Besides…these are movies, they aren’t food or water. If you think the price is too high, don’t buy them.
April 22nd, 2006 at 5:24 pm
Zingar says:
I know how to cut DVD costs, don’t pay the half ass star actors all those millions of $. Make them accept that they can make a good living like a normal working person and don’t need their own jet. Stunt man does the hard work, it kills me that I actually broke my back working and never made more than $16 an hour. They get too much money to sit around in trailers while someone answers the phone for them and someone else serves them drinks. Spoiled richies that drive up the cost of living for the working class.
April 22nd, 2006 at 5:32 pm
capn capn says:
piracy makes me soooooo horney.
April 22nd, 2006 at 5:32 pm
Andrew says:
Has anyone thought about the other implications of this?
When the movie industry is suing a party for the thousands of dollars in “lost revenue” it could easily now be argued that this figure of loss they are claiming is fraudulent?
April 22nd, 2006 at 6:03 pm
hi-tec_shoes says:
Our Top of the line military boot sells for almost 300 CDN in Canada. It costs us, after shipping from Nam a whopping 11 CDN. You, the rubes will pay whatever we charge.
April 22nd, 2006 at 6:11 pm
Michael Smith says:
What I want to know is who’s going to buy The Aviator - even for $1.50?
April 22nd, 2006 at 7:35 pm
Gord says:
So… this is how pirates are rewarded, with cheaper dvds. And this is how we have been ripped off all along, paying for the packaging. Disgusting.
April 22nd, 2006 at 8:06 pm
woodpecker says:
doesnt this show that pirating is good for the consumer??
April 22nd, 2006 at 8:22 pm
Billy says:
Pricing goes my domestic supply and demand, in china the market dictates that dvds wont sell for $15 like they do in the states. however, in the good old USA they sell enough at the $15 price to maximize profits…any more expensive and they’d lose out on too may consumers, any less expensive and they would achieve their profit maximizing output (#sold x price). so, as long as people want to watch movies the price is going to stay the same around here, its good business!
April 22nd, 2006 at 9:18 pm
SmokinTaco says:
The actors get paid almost half the movie budget goes to the big named people getting over 30mil eatch so that leaves what 20mil to make a “ok” movie oh and sometimes they get a % so i just say blame the actors but then a movie with bad acting also is crap so i dont watch movies any more waste of money and time
April 22nd, 2006 at 9:19 pm
Seth says:
“doesnt this show that pirating is good for the consumer??”
If Piracy was as rampant in America as it is in China, there simply wouldn’t be a movie industry. That’s fine if all you want to see are independent movies about (excuse me for the gross generalization) gay cowboys eating pudding (Not that there’s anything wrong with that). But if you would like to watch something that actually take some money to produce (Star Wars, Lord of the Rings, The Matrix, Schindler’s List, any sort of feature length animation, ect. ect.) the people making the movie need a source of income to finance the movie. Simply put: if they don’t make money, they don’t make movies. If pirates take too much of their income, movies won’t be made.
If having nothing to choose from is good for consumers, then I guess pirating is good for them as well.
If you think $15-20 is too much for a DVD, don’t buy it. I’ve only bought a few DVDs because the price isn’t worth it to me. But don’t think you’re justified in stealing it just because you don’t want to pay that much for it.
April 22nd, 2006 at 11:26 pm
Shark says:
So hurry up and start selling downloadable versions of the film. I’m actually afraid they’ll have lower standards then the pirating community. However, if they can pull it off, then I’ll be happy to buy a copy for $5. At least if they let me copy/burn it to back it up. If not, then we’re back were we started.
How about a little trust instead of hate from the MPAA? Maybe more people will buy their product if they actually get the abilities and options that people not only want, but used to have.
April 23rd, 2006 at 1:56 am
Robert Paulson says:
In russia, movie watches you
April 23rd, 2006 at 3:03 am
Economist says:
Why don’t you consider the price levels?? Living on $120 a month won’t buy you $15 DVD.
April 23rd, 2006 at 7:20 am
verbitterd ~ förbittrad » Blog Archive » finally cheap dvd’s? says:
[…] the equivalent of U.S. $1.50… Finally cheap dvd’s in cheap packaging… (link) This entry was posted on Sunday, April 23rd, 2006 at 5:13 pm […]
April 23rd, 2006 at 8:12 am
Dave says:
I can’t find these, and I live in Beijing. Regular pirated DVDs are 75 US cents, so I guess that people aren’t excited about paying twice as much to be legal (though I expect the quality is a little better).
April 23rd, 2006 at 11:08 am
vixenk.net says:
[…] The Aviator, sans all the normal packaging, is available for the equivalent of U.S. $1.50. Can’t Beat Pirates? Compete With ‘Em, Says Warner Home Video @ Alice Hill’s Real Tech News - Independen […]
April 23rd, 2006 at 11:20 am
Huh says:
Movie costs, advertizing costs, storage costs, transportation costs etc are what drives the costs of DVD’s. Unless a movie made money in the theater over its initial investment of making the movie, advertizing and distribution(which most movies dont nowadays) then the manufacturer has to make up its money on the home market.
In essence these DVD’s do not cost .60 cents to make they are costing 5-10 dollars to make unless they have already made profit.
April 23rd, 2006 at 12:25 pm
Stephen says:
I just read in the Smithsonian about workers in a shoe plant in a booming city in China that make about $400 per year. Average per capita income in that city is about $2500 per year. Rent can consume about half of that. Expecting companies in the US to sell anything there at the same price as here is ludicrous and naive. Any sale at $1.50 is a sale they wouldn’t have made otherwise. Its the same thing at work here as on the airlines. The guy sitting next to you may have paid a fraction of the price that you did. It may be very possible to poll everyone in the plane and find out that there were a dozen or more differnt priced paid. No one seems to get too mad at that.
Goods cost differently depending on where you live. Wages are different. If you feel ripped off at $15 to $20 per DVD here, then why in the hell are you buying DVD’s? What are you….stupid? I don’t own a single DVD other than a boxed set of the original Star Wars that I got as a present. If you feel you’re paying too much don’t buy em. Nobody is forcing you too. I bet Nike isn’t selling shoes at the same price there as here either.
April 23rd, 2006 at 12:25 pm
Olis Welt says:
Umsatzeinbussen
Warner Home Video is trying to compete with film pirates in China as they launch a trial program. The Aviator, sans all the normal packaging, is available for the equivalent of U.S. $1.50.(RealTechNews)Dafr kann man den Film hier in Deutschland noch nich
April 23rd, 2006 at 12:40 pm
Herman says:
You guys are douchebags… you are ANGRY/upset because they are trying to sell those DVDs for $1.50. You should be ANGRY too that we buy clothing for so much, why not move to India Or China where the clothes cost 1/10th of what they cost here? You have to realize how pricing works in different countries. When someone pays the equivalent of 50 cents for a pound of mangoes in India, or even less for a kilogram of rice… why do you expect them to pay even $7.50 for a dvd? Normally non-pirated movies wouldn’t have cost $7.50 in China anyway, they would cost a bit less, and this $1.50 is still significantly less, but comparing this amount to what we pay HERE is absurd. As well, it costs about the same to produce a CD & DVD, but we pay different prices for blanks. 1000 without a doubt cost less than $10 to make (1cent each) But we buy 100 for $25… That doesn’t mean stores like Future Shop buy those 100DVD spindles for $1 either though… there are also markups along the way, you guys really need to start understanding how stuff like this works
April 23rd, 2006 at 1:59 pm
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July 22nd, 2006 at 7:38 pm
dvd manufacturing agent says:
I work with a factory that produces dvds. I just want to give you all the correct cost range for dvds - maybe it will add to the fire, though a bit late.
There are 2 groups that receive royalties of every disc and every player made. they are called 6C (6 companies) and 3C (3 companies), and include companies such as Sony, Toshiba, JVC, Philips etc etc. For every disc produced, a total of $0.10 is paid to these companies, 5 cents to each group. So that is the base cost for a disc before fixed costs, material, etc are added in. For Hollywood movies, the runs are typically in the 300,000 - 1,000,000 + discs. this means that the per peice cost is extremely low, figure $0.05-0.08. Total cost of production = $0.15-$0.18 for the movies we buy. figure in an extra $0.10 for packaging and $0.10 for shipping, and you’re looking at a total cost of $0.38. These companies are making a killing in markup, making billions from royalties on discs and players. Obviously the price in the US for a disc is way to high, but consumers buy and buy and buy, so they have no reason to adjust it. What happened in China was they first saw this huge population, figured it equalled a huge market, then tried to sell the discs for $20.00 a peice when the average yearly salary in China was $190.00. Anyone wonder why there’s such a huge black market there now?? The movie studios shot themselves in the foot, essentially created the black market, and cry daily to the media that they are losing billions in asia. Billions if calculated as $20 per disc times lost sales…
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» Piracy in China nets them a Vista Price Break » Blog Archive Alice Hill’s Real Tech News - Independent Tech says:
[…] You may recall my previous story about how Warner Home Video, unable to beat pirates in China, was offering them a cut-rate $1.50 per DVD price in an attempt to garner sales. And, as we indicated then, it was a decision that seemed … to put it mildly … unfair to consumers in countries where piracy is not rampant. Well, it looks like pirates have gotten Chinese consumers another price break, as Microsoft is lowering the price of Windows Vista in that country … by 50%. Microsoft Corp. has more than halved the retail price of its Vista home basic computer operating software package in China to 499 yuan ($66) from 1,521 yuan, and the price of its premium package to 899 yuan from 1,802 yuan, effective from August 1. Source: Reuters UK […]
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Todd says:
Very few people understand the movie and music industry. ALL blockbuster films make a profit in the first 2 days in theaters. Not all films are blockbusters and may take a little longer to make a profit. Somewhere around 80 percent of films make a profit before leaving the theaters. DVD’s are icing on the cake. Let’s not forget that when DVD’s were invented the movie studios yelled long and hard about how they would lose money. Just like they did with VCR’s. I can order replicated dvd’s for around 1.00 and thats for a few thousand. Now imagine the price break when you order a million. A cd/dvd factory can produce 1-2million cds/dvds PER DAY. The scale of this ripoff is huge. I doubt it cost more than 5 cents for a replicated/packaged dvd in million unit lots. You would fight like hell to protect a pure profit of $15 to $20 per item. Most products have a 50 percent markup. So in reality we should be paying around 10 cents per DVD. Frankly nothing hollywood puts out anymore is worth more than a $1.. I am tired of paying for Lindsay Lohan to get high.
January 22nd, 2008 at 3:56 am
Todd says:
Now I will focus on the music industry before the 1950’s musicians made money by PERFORMING LIVE. In the 50’s record sales really took off. Musicians could make good money by having a hit record not by performing live. Then comes cassette tapes. In the 1970’s the RIAA called casette tapes the death of music. At their height in the mid 80’s approx 500 million cassettes per year were sold. It wasn’t the death that RIAA predicted. In fact the 80’s and 90’s were boom times for the record industry as people paid once again for the same music on CD. Then came MP3 and RIAA once again said death was here. The fact is on average an avid music fan downloads a lot but they also buy a lot. CD sales have declined but look at all the stuff kids have to spend money on now. When I was a kid it was tapes. My daughter has to spread her money on cds, dvds, gameboy games, ps2 games, xbox games, video games, computers, ipods, portable dvd players. None of that exsisted when I was a kid. To be hip you had a walkman and 50 tapes now you need an ipod, gameboy, computer, dvd, tvs, cellphones, the list is endless. So once again musicans have to make money like they always have except for a very golden years and actually perform LIVE.
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