discussion about real cost of a movie DVD

[lam_das]

I wonder if someone can explain this to me:

http://msnbc.msn.com/id/12425693/

In china Warner has anounced dvd movie for 12Rmb. That's about 1.5USD. Much much less than what we pay. But that's not the question. A pirate there sells the same dvd for 6Rmb. How come? One sophisticated assembly spends 10USD (assuming typical consumer cost of 15USD and a profit and other costs of 5USD) to produce a DVD in one place, 1.5USD in another place, and one unsophisticated pirate can produce thousands of DVDs for under 0.75USD a piece. If I am a Warner exec in US, why am I not asking: Who's smoking?

[foxyshadis]

And usenet is full of posts by pirates offering cds with thousands of software packages worth millions of dollars for $5. Does that mean Photoshop is only worth a penny?

Now, your comparison of official prices is more interesting, but I think it falls under pricing as the market will support - people in the US are used to paying around $20 so they'll continue to grudgingly pay $20, and bargain hunters will find low-cost alternatives, like deepdiscountdvd. In china, people are used to paying pirates $1, so warner will try to push legitimacy (and quality) as being worth another dollar over pirate discs. Plus, the american market has usually already paid for the cost of the movie and marketing via theater and dvd sales, so the international sales are mostly profit. (Admittedly, often dvd sales also are for most of their run.)

They basically will keep charging whatever the market supports, though. Though when the market no longer supports it, it can take a looooooooooong time to sink in to people stuck on denial - the solution to declining theater attendence has been to scream piracy and increase ticket prices, rather than reexamine theater quality vs. home theaters, movie quality, and early dvd releases with continued sales. Stupidity tends to pave the way to new market enteties, eventually, fortunately for us.

[adam]

The pirates sell so low because they have a distinct advantage, they don't have ~$60-100 million dollars to recoup. Less than 2% of movies break even at the box office. The rest is made up largely in DVD sales.

[Mug Funky]

Less than 2% of movies break even at the box office.

sweet jeebuzus! didn't know that.

that can't all be down to piracy... i wonder why Hollywood continues to use the same business model? perhaps they should ditch the expensive special effects unless they're really necessary, and refrain from encouraging the more terrible big name actors with such large pay packets. shooting in HDTV or similar would also cut production costs a lot and not hurt quality if it's done right (most cinema projections are so blurry you could probably get away with a PAL DVD in it's place, regardless of what's actually on the film). digital cinema would also cut distribution costs significantly (and free up a lot of warehouse space!).

but selling discs for 75 cents seems like a very small margin. i suppost pirates don't have to worry about licensing fees and such though, so perhaps they can afford it? (CSS alone costs a fair bit per disc, not sure about macrovision because we never use it).

[setarip_old]

@lam_das

Hi!One sophisticated assembly spends 10USD (assuming typical consumer cost of 15USD and a profit and other costs of 5USD) to produce a DVD in one placeIs there a source for these assumed numbers? I ask because I tend to think the margin is significantly higher (cost lower) than what you've indicated.

Also, you did notice that the article indicates that the (at least the first) product being released at this lower price is NOT a new release ("The Aviator")?

[Revgen]

Less than 2% of movies break even at the box office.

This is because they spend so much money on Summer Crapbusters instead of doing good movies. I just watched Ghostbusters the other day and I was still entertained despite the fact that the special effects were outdated.

Movie companies no longer know how to make movies that are fun (with the exception of Pixar). Instead they make movies that have already been made (Poiseidan), adaptations of comic books (X-men), or novels (Lord of the Rings), instead of something original. The last original Summer movie (actually it was released in April, but still close) that was actually good was the Matrix, which was released over 6 years ago.

[adam]

I also forgot to mention the production costs of the DVDs themselves. You've got to pay to master it, pay licensing fees to the DVD Consortium, dolby and maybe dts, and depending on their contracts you may have to give the actors or director a cut of the DVD profits. Bootleggers just take the finished product, copy it, and pay for the pressing/printing costs. After that its straight profit.

[foxyshadis]

I'd say adaptations are hollywood's biggest strength by far when it comes to story-driven movies. LotR, Stephen King movies, Jane Austen movies, most noir, etc. Most of the best movies I can remember are either adaptations or heavily based on a book. It takes a director with a lot of talent to do a wholly original movie well (like Hitchcock), someone with lesser talent can pull off remaking a proven story well. I'm glad that movie-izing fantasy series is the new vogue, because even if they munge up the acting, at least the original story will be there.

Of course, SFX is a fad that's already run its course, though not all of Hollywood seems to have realized, so I think we'll be seeing egregious sfx die down as some new big fad pops up.

[adam]

Adaptations will always be a major source for movies because it cuts down on marketing costs which these days are typically as much as 1/3rd of the film's total budget. When your story and characters are already known you don't have to work as hard to get people on board. Look at King Kong, it ranks right up there with some of the most expensive films ever yet they had an insanely low marketing budget. All you need to do is tell people the title and they know the story and either want to see it or don't. Granted Kong didn't do so well at the box office but it was a historically low year all around,

[foxyshadis]

And an incredibly ponderous movie (prime candidate for ego editing there - it could have been a smashing flick). Most of the memorable movies this year have been memorably bad; it's no wonder box office is down, when the season is mostly rental quality. Christmastime/new year's had the last cluster of decent movies.

[Mug Funky]

Is there a source for these assumed numbers? I ask because I tend to think the margin is significantly higher (cost lower) than what you've indicated.

no source here, but some discs are quite expensive to produce. examples:

- anything in a tin case
- astroboy, 1960's (PAL and NTSC editions). production costs were massive - it was quite a few months work recovering lost masters, fixing those that existed, painstakingly editing each episode. full time work for 2 people for about 6 months total, plus design, authoring, replication, tin box, etc.
- 2046, HK edition. this was a tin case with a plastic window so you could see the disc. not sure if the r4 had that too (i wasn't able to get one on my monthlies :(). i think GITS SE UK edition was similar.
- anything with peculiar printing, like foil pressing, embossing, spot colours, belly-bands, OFLC classifications as stickers (yay! my computer is now "PG - scary scenes"), 8cm discs, free merchandise, etc.
- gold discs! yay early 90s! :)

i wouldn't say USD$10 per disc, but i can imagine it getting that high for some special releases.

also recall that "Blue Monday" was the biggest selling 12 incher at the time (possibly ever), and it didn't even turn a profit.

[edit]

of course most discs are cheap as hell to produce.

[lam_das]

I also forgot to mention the production costs of the DVDs themselves. You've got to pay to master it, pay licensing fees to the DVD Consortium, dolby and maybe dts, and depending on their contracts you may have to give the actors or director a cut of the DVD profits. Bootleggers just take the finished product, copy it, and pay for the pressing/printing costs. After that its straight profit.
Ok, adam's response is probably close to what I was expecting in an answer. I honestly wanted to understand the anamoly in prices. The numbers (10$, 15$) I presented were just my conservative guess, nothing from any source. Other numbers were from the article of course.

So, people agree that it really costs them to deliver the nicely wrapped DVD to me so that the price is justified? So after paying off all these cuts, how much profit are we talking about for Warner per disc in the US? 5%, 10%, 20%??

Less than 2% of movies break
And they are ready to forfeit the cost recovery from chinese region just to thwart piracy? Sounds too easy to believe. The Aviator recovered about 90% of production cost at the domestic box office itself and made about 200% worldwide, so probably a good candidate. But then, this logic can be turned around. Most successful films should be sold free on DVD...:-)) but that's probably where they make the most money.

[Lil' Jer]

Movie companies no longer know how to make movies that are fun (with the exception of Pixar). Instead they make movies that have already been made (Poiseidan), adaptations of comic books (X-men), or novels (Lord of the Rings), instead of something original. The last original Summer movie (actually it was released in April, but still close) that was actually good was the Matrix, which was released over 6 years ago.

This is a joke, right? Hollywood has been making remakes and movie adaptations of novels/comic books, etc for well over half a century.

[dragongodz]

This is a joke, right? Hollywood has been making remakes and movie adaptations of novels/comic books, etc for well over half a century.
hows it a joke ? look at recent years and its not just the occasional remake or book adaptation mixed with many original movies. its now closer to spot the original. even then what may appear as original may be a remake of a foreign film.

the real sad thing is these are not even good remakes but the majority are rubbish. ooow lets remake that old horror/thriller but lets turn it in to yet another slasher movie with unlikable victims/heros who the audiance ends up wanting to see killed.

[adam]

And they are ready to forfeit the cost recovery from chinese region just to thwart piracy? Sounds too easy to believe.

Well I think the alternative is to sell virtually nothing at all there. Also selling DVDs is not always about making a profit on just that film. There are many movies that the studio could write off. From their lackluster theatrical run its just clear that the DVD won't be a big seller and the movie will never be profitable. Releasing the DVD sometimes just makes their losses even greater. So why do it? Studios only release a limited number of movie a year. They must maintain a presence so they want as many movies of theirs out there as possible each year, so that people recognize that the studio is producing. This supposedly increases ticket sales for their subsequent films.


The Aviator recovered about 90% of production cost at the domestic box office itself and made about 200% worldwide, so probably a good candidate.

You are only looking at box office receipts. Only about %50 of that goes back to the studio. Everybody from the actors, director, producers, and on down the line receives their % cut first. Oh yeah, the theatre gets their measly cut as well.

I forget the numbers. Its something like every $100 million you spend on a film you've got to earn $300 million at the box office to recoup it. Big blockbuster films almost never break even at the box office, its always break out movies with relatively small budgets.

I see that the Aviator had a budget of $110 million and a worldwide gross of just under $215 million. Trust me, it did not break even a the box office but I'm sure it is turning a profit on DVD and through television airings.

[Mug Funky]

Releasing the DVD sometimes just makes their losses even greater

some studios will outsource the DVD to a smaller independent distributor. not sure if that helps matters, but DVD production and distribution costs are covered, and they get a cut of the sales. and the independent distributor makes a profit because of it's (much) lower overhead (also because there'll be well known actors on their disc, which helps matters a tad). after all, if you don't have to distribute absolutely everywhere in the world there's less links in the chain. MGM does this occasionally, but i can only name 1 or two titles this has happened with.

i just wish some of the films/series with not-so-good figures would get a release on DVD though... there's some great things out there that slipped under the mainstream radar.

[Lil' Jer]

hows it a joke ?

The fact that you act like things that have been commonplace for over 60 years in Hollywood are somehow new.

look at recent years and its not just the occasional remake or book adaptation mixed with many original movies. its now closer to spot the original. even then what may appear as original may be a remake of a foreign film.

Again, this isn't new. Look at any decade of movies in the last 60-70 years and you will see the same thing. You mentioned the Ghostbuster as if it was a time when Hollywood made original movies. Though its funny that you ignored all the crappy movies, all the remakes, and the numerous cartoon/comic book made movie adaptations. Your romanticized view of past decades of Hollywood movies is less than accurate and that's the point.

the real sad thing is these are not even good remakes but the majority are rubbish. ooow lets remake that old horror/thriller but lets turn it in to yet another slasher movie with unlikable victims/heros who the audiance ends up wanting to see killed.

Yeah because the remakes of old were sooo great. :rolleyes: Oh wait, they weren't.

[Doobie]

The pirates sell so low because they have a distinct advantage, they don't have ~$60-100 million dollars to recoup. Less than 2% of movies break even at the box office. The rest is made up largely in DVD sales.

Movie studios are infamous for cooking the books to make it look like they're not making money.

The cost of actors in many movies is tens of millions of dollars. If they were hurting, this would be a lot lower. BTW, I think expensive, big-name stars detract from movies, rather than add to movies.

[Doobie]

In china Warner has anounced dvd movie for 12Rmb. That's about 1.5USD. Much much less than what we pay. But that's not the question. A pirate there sells the same dvd for 6Rmb. How come?

No, a pirate does not sell the "same" DVD for 6Rmb. That's not enough profit to make the effort worth it. The article says that's the starting price, and I'd say that's for movies on CD (even VCD, barf) and little packaging. I suspect that 12Rmb nicely undercuts the pirates on value.

Only the most sophisticated pirate operations could hope to match the studios on production cost of DVDs.

[Shinigami-Sama]

Yeah because the remakes of old were sooo great. :rolleyes: Oh wait, they weren't.
Scarface :)

[dragongodz]

The fact that you act like things that have been commonplace for over 60 years in Hollywood are somehow new.

try reading what i said. i did NOT say it was new but rather it has grown in more recent years.

You mentioned the Ghostbuster as if it was a time when Hollywood made original movies.
i didnt mention ghostbuster, so try reading who said what.

Though its funny that you ignored all the crappy movies, all the remakes, and the numerous cartoon/comic book made movie adaptations.
i ignored nothing thank you. i didnt say there wasnt bad films then, i didnt say there wasnt remakes then(i already said there was), i said there are far more remakes and sequels etc etc etc made now and the majority of them are actually crap. when you understand the difference in what i said then comment on it.

Your romanticized view of past decades of Hollywood movies is less than accurate and that's the point.
i dont have a romanticised view of the past at all. i could easily name many crap movies. that doesnt change the fact hollywood is pumping out heaps of dross now and pushing it as a blockbuster because its a remake or has heaps of special effects.
give me the 1976 remake of king kong over that "lets make a really long and expensive movie with heaps of special effects and throw in a bit of a half baked retelling of the actual story, they wont notice its only half baked if we throw enough fx at them" that is peter jacksons attempt. he should have stuck to hobbits.

[setarip_old]

give me the 1976 remake of king kong over that "lets make a really long and expensive movie with heaps of special effects and throw in a bit of a half baked retelling of the actual story, they wont notice its only half baked if we throw enough fx at them" that is peter jacksons attempt.Actually, the many of the special effects used in the latest "Kong" were spot on enhancements of the 1933 original - although I wonder why, in the new one, they weren't able to make the smoke from the ship's smokestack move as it left the harbor (It looked like a piece of cardboard tethered to the smokestack)...

[Mug Funky]

he should have stuck to hobbits.
come on... that's in pretty bad taste (lol, see what i did there?)

FWIW i found the 1976 king kong to be slightly above abysmal. in that i could still laugh at it. though i haven't seen the new king kong (i really don't like long movies. with the possible exception of 2001: a space odyssey, which is very cool. but only because i can pause it to go to the can).

romanticized view of past decades of Hollywood movies
romanticising the past... i've heard lots of people say stuff like that. i'd like to believe things are pretty much as they've always been, but it's often not true, and one only has to go back a few years culturally to understand why people tend to romanticise the past - often things were simply better back then, and it's not just old fogies thinking this. i'll take Led Zeppelin over Linkin Park any day of the week - it's simply better in every way, no matter how you look at it (subjective opinion is fun isn't it :)). the only parts of culture that don't appear to be in decline are science/technology and the emerging internet culture we're taking part in. that's just my (grim) opinion though, but it's difficult to dismiss.

[edit] i might add some aspects of art are getting better, but most of it is tiny-brained big-idea stuff that has less impact on the viewer than the blank wall behind it.

[dragongodz]

come on... that's in pretty bad taste (lol, see what i did there?)
haha, yes. :)

FWIW i found the 1976 king kong to be slightly above abysmal. in that i could still laugh at it.
well i never said it was great, far from it. however compared to the new one i found it far less groan and roll eys - worthy. the new one is basically another "look at how much money we can spend on special fx" film.

one only has to go back a few years culturally to understand why people tend to romanticise the past - often things were simply better back then, and it's not just old fogies thinking this.
who are you calling an old fogie ? ;)
seriously though. i can also point to things that have improved greatly, for example anime with the quality of not only the original footage and complexity of stories but dubbing etc aswell. it just seems to me and others i know that hollywood has lost the plot(pun intended) more and more in recent years. they are trying to rely on past movies names(half the time changing the actual story) or remaking movies from other countries and/or using heaps of special fx to make it look like a blockbuster.

[Revgen]

Adaptations will always be a major source for movies because it cuts down on marketing costs which these days are typically as much as 1/3rd of the film's total budget. When your story and characters are already known you don't have to work as hard to get people on board. Look at King Kong, it ranks right up there with some of the most expensive films ever yet they had an insanely low marketing budget. All you need to do is tell people the title and they know the story and either want to see it or don't. Granted Kong didn't do so well at the box office but it was a historically low year all around,

I am a movie viewer. I don't give a damn about marketing costs. All I care about are movies that are original and different. Why should I pay $10 to see something I've already seen?

It's really that simple. If they don't get it, they are gonna lose more money.

[adam]

Revgen, obviously they are trying to make a movie that people will want to see AND that saves them money on marketing. There is no other industry in existence that is riskier than filmmaking and remakes and adaptations (ex: comic books, books, plays, etc..) are a safer investment generally. Its not like they aren't trying to come up with original ideas that will translate into a profitable movie too, its just that this is always easier said than done.

[Shinigami-Sama]

most of the movies I like are the smaller b-grade movie, not this A-lister movies that are nothing more than a rehash of another movie, so if they're going to try and make money, why don't they just give up the big name actors and get some b-list actors to play, that cuts the budget quite a bit and gets some new blood in the industry, I know I'm sick of keanu and all them