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DVD a ripoff?

Discussion in 'DVD' started by Jonny_L, Mar 8, 2005.

  1. Jonny_L

    Jonny_L Stunt Coordinator

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    First off, I apologize if this has been mentioned before...its a biiiiig forum.

    But I was surfing around and came across this story in wired.com from a few days ago -

    Taking its battle against rampant piracy of films and music to the front lines, Warner Home Video said it will sell cut-rate DVDs in China in a bid to compete on the counterfeiters' home turf.

    Basic DVDs, to be available shortly after a film's theatrical release, will sell in China for as little as 22 yuan ($2.65), the company said. That's still more than the pirated versions readily available in China for 8 yuan ($1).

    Warner's basic versions will not carry any DVD extras such as directors' interviews and behind-the-scenes footage, the company said. But versions with more features will be available a bit later for 28 yuan ($3.38).

    According to the industry, theft in China of copyrights and patents cost Western companies an estimated $16 billion in lost sales each year. Despite sporadic arrests, counterfeit books, DVDs and music are easily available on almost every city street and even in shops.


    So let me get this straight? WB is going to sell high quality copies of DVD's that just came out in theaters in China for $2.65? I assume they are making a profit off doing so, otherwise there would be no real point.

    $3.38 for a special edition?

    WB needs to explain to me why I shouldn't feel totally ripped off as a consumer when I pay anymore then that for a specific title. Also, how does this help piracy? A pirate group will simply buy a single high quality copy, make their own copies of it and undercut WB. And / or, Joe Blow tourist will buy one and copy it or release it to the internet for free.

    Am I missing anything here? This would be a great question to ask WB during their chat. I dunno if I'll be around at the time though.
     
  2. Jason Seaver

    Jason Seaver Lead Actor

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    Do you feel that the entertaiment you've gotten from a DVD is worth what you've paid for it? If so, you haven't been ripped off.
     
  3. Jonny_L

    Jonny_L Stunt Coordinator

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    It's not about the entertainment, I can be entertained for free by shadow puppets on a wall.

    It's about whether or not the profit cost of movie studios is gauging consumer's wallets. Knowing that I'm paying an incredibly huge percentage more, to get basically the same product as a foreign market later, is fairly amazingly jaw dropping and worthy of the term RIP OFF.

    Come to think of it. This move might actually encourage piracy elsewhere. If anyone sees the ultra low prices and gets disenfranchaised, they might revolt and start copying over here. Just a dumb move by WB all around I think.
     
  4. Runar_R

    Runar_R Second Unit

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    Well, for one thing I'm quite sure that distribution, advertising, production etc is a whole lot less expensive in China.
    Secondly; is this any different than any other consumer product? China is a low-cost, low-income market. More or less everything is cheaper there. I don't think they would sell many Dvds there if they were priced like in the US. If they want a part of the market, they have to price your product accordingly.
    Frankly I can't see many getting very upset over this.
     
  5. Aaron_Brez

    Aaron_Brez Supporting Actor

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    They may be making a profit, or they may be breaking even, or possibly even taking an insignificant loss (though I doubt that last). This is not a profit-making move (directly), this is an attempt to gauge the Chinese market's response to legitimate low-priced copies, and is aimed directly at the pirates' market share.

    If the Chinese market buys the legit DVDs instead of the black-market ones, the pirates will make less money-- which is hitting them where it hurts, and WB will not lose anything, even if they don't gain anything. If the Chinese market still spurns the legit copies in favor of saving a buck and some change, the studios will know that the old "price it more reasonably and people will buy the legit copy" is BS.

    I find it a fascinating economic experiment, really, and will love to see the results, however they turn out.
     
  6. Kyle McKnight

    Kyle McKnight Cinematographer

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    You could look at clothes, shoes, any other good. Because it's cheaper in another country doesn't mean that you're gettin ripped off.
     
  7. Damin J Toell

    Damin J Toell Producer

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    So why do you buy DVDs at all?

    DVDs are priced at what the market will bear. And, indeed, their pricing structure in the US has lead to much success. If they were a true rip-off, they wouldn't sell very well. China, on the other hand, has been a tad more problematic. Studios aren't facing even remotely the same market forces in the US as they are in China, so it's pointless to compare pricing strategies in the two regions. Believe me when I tell you that no one at Warners is happy about the pricing change in China.

    If DVDs are too expensive for you, you can always look at shadow puppets.

    DJ
     
  8. Kain_C

    Kain_C Screenwriter

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    Maybe you should ask the Chinese if they are happy doing equivalent jobs and professions over there that we are getting paid several times more to do over here? I think what they pay for a DVD is really small beans in the grand scheme of things. Why not just fly over there every release day over there and buy the DVDs for real cheap?
     
  9. AnitaPeterson

    AnitaPeterson Stunt Coordinator

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    I don't think you can compare DVDs with cars or shirts. At this point, you can't pop a shirt into a $300 computer and obtain a perfect copy within minutes.
     
  10. Holadem

    Holadem Lead Actor

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    Funny.

    Things cost what people are willing to pay for them. There are many products here in the US that cost significanly less than elsewhere. Heck, gas is 20 cents cheaper by my friend's house 20 minutes away. And significantly more expensive in say europe.

    It's about what the market will bear. China is a different market.

    Now where is this free shadow puppet show I keep hearing of?

    --
    H
     
  11. Rob Gardiner

    Rob Gardiner Cinematographer

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    Jonny_L,

    If you think $15-20 for a DVD is a rip off, I'm guessing you weren't around during the laserdisc days. [​IMG]
     
  12. Jason Hughes

    Jason Hughes Supporting Actor

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    You could move there.
     
  13. Mikya

    Mikya Extra

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    Nope. No way. The point is to dry up the market for the pirated copies by hooking the Chinese on the studio's superior product at a currently competitive price. Only after winning that battle -- and taking losses for many years -- could Warner turn a profit in China. If it does nothing now, there will never be a market. It's a long-term investment. As for feeling ripped off, well, I'm happy to pay for Warner's product. Would that I could pay other studios for the same quality.
     
  14. Kelly Grannell

    Kelly Grannell Second Unit

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    1. Most pirated DVDs in China are US$1 a pop, therefore at close to US$3 a pop, it's still almost triple the price of their pirated counterpart.

    2. Many piprated DVDs in China are top-notch quality. One of my husband's job is to compare original vs pirated DVDs. In MOST cases, the DVD-9 pirated DVDs have identical quality to the original. The only difference is the cover/packaging which virtually nobody gives two $#!+s about it.

    He thinks it's a dumb fruitless move, I think so too.

    Heck, his songs were pirated in certain parts of Asia, even after dropping his album street price to US$5 (originally US$10) to combat piracy (selling at US$2 a pop), the official album sales number stays the same. His (and some other companies) tried this strategy for several years and in the end they boosted their prices back to US$10 a pop, and in the end they make more money (although quantity-wise the sales numbers have dropped rather significantly).
     
  15. Kevin Deselms

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    There are a number of things that are not required to sell DVDs in China, that are required here. First of all, the studios spend millions upon millions of dollars in promoting the latest DVD releases - they will not do so in China. Secondly, the packaging is much cheaper, as usually a DVD comes with the cover art and disc inside a flimsy plastic sleeve...if you want a case, you buy it and put the art/disc in it. They won't need to spend money on high-quality silk-screening on the disc. Distribution will also be cheaper, and given that they will probably be doing the duplication in China, other costs will be lower too.

    However, it won't make even the tiniest of dents in China's piracy machine. They have become too adept at making perfect copies, including dual-layer DVD-9, with full-color and full-resolution artwork, silk-screened discs, etc... There are levels of bootleg quality in China, from the back-alley, self-sustaining operation of people making their own copies and selling them, to the places who actually have stamping equipment, printing presses and the whole nine yards.

    This also shows a staggering lack of cultural knowledge about China's natives - they are, culturally and by necessity, penny-pinchers. They earn very little (though the cost of living is also very low) and they will not pay one yuan more than they need to for ANYTHING - so the idea that they'll willingly pay two or three times as much to get a "legitemate" disc from the studio, which has no discernable difference in quality, is very uninformed. Besides, they typically do not CARE about things like video quality.
     
  16. Terry H

    Terry H Second Unit

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    Well, I don't believe that Warner is taking a loss. This seems to fix production costs at a buck or two. They sell for $15 - $20 or more. I knew they made a good profit but WOW! I never realized it was so huge. Assigning numbers clearly shows just how grotesque the profit is. Incredible that some studios have raised the price of 2 disc sets to $40. They have elevated greed to an art form.
    This information sure puts a new spin on music rights issues. They can't afford to pay for music rights so we get chopped up sets? Afford? With profits that huge? You gotta be shitting me.
     
  17. Jason Seaver

    Jason Seaver Lead Actor

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    That's just manufacturing costs. I mean, it's not like they spent several million dollars making the actual movie on the DVD or anything - that's just magically formed out of the random bits they press onto the discs.
     
  18. ChristopherDAC

    ChristopherDAC Producer

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    Manufacturing costs of any optical disc format are near zero -- the materials are cheap and the equipment amortizes over a very long lifetime. Even LaserDiscs never cost more than $3 or $5 a side in production quanitites, in fact at one point Image was marketing certain releases at $9.99. CDs cost maybe $0.50 maximum, with $0.20 a better figure; DVDs not more than $2 for double side/double layer, with $0.75 a more usual amount. This is true no matter where they are pressed. If it were not true, the "pirates" certainly could not make money at $1.50 a copy!
    The present restrictive "intellectual property" regime is incredibly wasteful, allowing as it does studios to restrict content and its dissemination and simultaneously fatten on the profits they refuse to pass on to the recording artists. There are plenty of albums and movies out there which will never be released for just such reasons.
     
  19. James Reader

    James Reader Screenwriter

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    Well, you can't compare prices universally. It's not fair. China has a much different standard of living.

    You know, if you think US DVDs are a rip-off then get a multi-region player and import discs. Why do you think so many non-US residents have multi-region players? It's not just about getting films early - most of the big films are simultaneous releases now. It's about timing, supplements and price. After all, thanks to the falling dollar US discs are cheaper than UK discs.

    As for the prices, notice how many of the stores can do massive discounts on release week? Its not just the studios making money. If stores can discount by that much, how much profit are they making when selling for MSRP later?
     
  20. Jeff Gatie

    Jeff Gatie Lead Actor

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    To give a lesson in retail, these sale items are often not profitable at all and sometimes are priced at less than cost in order to get the consumer into a store. The idea is if they get you to come in to buy the DVD, they have a chance for you to purchase other profitable items. Supermarkets do this all the time, with 2 liter bottles of soda being the main item (I worked in food retail for 9 years). Often a chain will price soda at 10-20 cents under cost figuring you are going to make a special trip to get it. Not only does this get you to buy other purchases when you come into the store, it attracts customers who may only shop at one chain to try out your chain, thus opening up the opportunity to switch their "chain loyalty". Trust me, switching "chain loyalty" is far and away more important than the loss of 10 cents on a bottle of soda.

    The marketing term for this pricing is called "Loss Leader".
     

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