re: Warners lowers Blu Ray Pricing in 4th Q 2008
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Originally Posted by Mike Frezon
What's the concern here? That the studios won't actually be turning a profit on the product?
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Yep, and retail outlets as well. Media preparation & manufacturing is only a small fraction (at most 1/20) of the cost of your Blu-Ray. The rest goes to studio, distributor, & retailer profit, promotions, transportation costs, & down a variety of rabbit holes. With DVDs becoming a "commodity" product, margins have fallen a long way. In a market of the existing very large size, there's still enough for profit to make new releases attractive, & enough money for marketing & so on (although there are a lot of small-time releases which don't get much publicity), even though a lot of the costs (manufacturing, packaging & transportation to an extent, &c.) are basically fixed.
Now, take a market which is at most a few percent of the DVD market, and try to impose the DVD pricing structure on it. There just isn't enough money in the pool to support serving that market. The demand for BD has to grow to some considerable extent
before prices can fall, which is in a microcosm why introducing
any new product is always a chicken-and-egg question. In the case of DVD the drop came somewhat early because a substantial part of the cost was soaked up by, e.g., losses at Internet retailers trying to undersell the market, which means your DVDs were paid for by their shareholders or venture capitalists. Unless you can sucker somebody into doing that again, the BD market is either going to have slow price drops & slow expansion, or go the way of HDDVD and collapse.
