Profit/Cost Margin

[ReduxInflux]

anyone know (and i know this might be a shot in the dark) what the profit/cost margin is for blu-ray production? since they're selling for a much higher price than an sd dvd? im wondering how much money the studio makes on each bd sale vs. dvd? and how much the financial aspect of production impacts what gets released and when... (especially with such a limited market) ?

[jorg]

i know for the player retailers like bb have somthing like 14% margin or around there for stand alones and for the discs if u wanna know what retailers get look at amazon at lowestr price for new bd and that probly what small reatilers have to pay for

[ReduxInflux]

not necessarily retailers...but im wondering what the studios get? if they make more producing sd dvds or producing blu-rays? just wondering if theres money to be made for them in the hi-def dvd market?

[richteer]

Originally Posted by ReduxInflux

not necessarily retailers...but im wondering what the studios get? if they make more producing sd dvds or producing blu-rays? just wondering if theres money to be made for them in the hi-def dvd market?

Short term, probably not much (especially for Universal!). At the moment, it's all about nurturing HD media, so that greater returns can be realised later. Once Blu-ray becomes common place, the profits'll start rolling in.

[MasterXeus]

Originally Posted by richteer

Short term, probably not much (especially for Universal!). At the moment, it's all about nurturing HD media, so that greater returns can be realised later. Once Blu-ray becomes common place, the profits'll start rolling in.

Back when I was researching which on going Blu-ray or HD-DVD (01-2007) I thought I read somewhere it cost somewhere around $1 per Blu-ray Disc and I thought I read that the master disc cost over $1000 per title.

I could be wrong so don't quote me. I would like to know what is the profit/cost margin is.

[Sylin]

Just a theory, but I would think that all you had to do is look at the cheapest of the BD's out there to determine how inexpensive they really are to produce, and gauge your margins off of that. If they're using the same disc (25g or 50g), and the same encodes, then no matter what the CONTENT is, the cost of production should be the same.

For example, the Nine Inch Nails: Beside You in Time BD currently sells for $16.95 at Amazon, and it has AMAZING PQ+SQ. So, if you can author a great BD and still make a profit at $17, then obviously movies like The Patriot or PotC, which are selling for around $23, are making a heftier margin because they know those titles will sell at that price.

FYI - No one is LOSING money on the disc duplication, unless they are over-ordering for the market. Once you get past your overhead costs of producing the master image, duplicating the disc and printing the case art is obscenely cheap... less than $3 per for BD, most likely. A SD DVD costs less than $0.50, including art and case in most instances.

[WickyWoo]

An SD DVD does not cost $0.50 including case

It's $0.70 for a DVD-9(maybe as low as $0.50 per disc at megamovie pressing sizes), case is at least another $1 for the case and artwork.

A BD-50 by my best estimates is around $3.50 after case and artwork.

Amazon is selling that NIN disc at virtually cost mind you.

By the time you pay for authoring, compression, and for a film-to-tape transfer for a professional studio title, you're talking in the neighborhood of $25,000, before the production and compression/authoring of special features, not to mention the main movie content on the disc.

The studios will never give you their exact figures, but I know how much the pressing rates are going for in the sub 25,000 range most people are running right now, and how much authoring is running. Combine that with advertising and overhead and they're not making that much right now.

[Sylin]

Originally Posted by WickyWoo

An SD DVD does not cost $0.50 including case

It's $0.70 for a DVD-9(maybe as low as $0.50 per disc at megamovie pressing sizes), case is at least another $1 for the case and artwork.

Let me clarify... I'm not doubting your figures (as in your experience, this may be the costs you've seen), but one of my buddies owns a CD and DVD duplication business. They're pressing DVD's at around $0.28 per disc (cost). While he does not do the art printing or case stuffing, he says that most non-premium art (the wrap-around art for cover, spine and back) only costs about a dime to print. The cases (generic black) are less than a dime as well.

This means that the cost of materials is less than $0.50.

Now, if you factor in the profit that these companies add to their pressing (because no one's pressing their own... Sony Pictures doesn't have a DVD duplication facility in their basement), then yes, the costs are higher due to mark-up. Add in production costs, shipping and distribution, marketing and other overhead, and sure, it goes up some more (although you could argue that production costs can be depreciated over subsequent "special edition" releases where they use the same masters). Everyone has to make a profit, and DOES, otherwise they wouldn't sell it.

But the main point behind my theory is that BD is only selling at around $25/disc retail because that's what the market will bear for new, exciting tech. It doesn't necessarily mean it's COSTING studios proportionately more to manu the disc. This is why places like Fry's and Amazon and other retailers put some BD movies on sale for $12-$15... and don't think for a moment they're losing $$$ on those sales, either.

[WickyWoo]

Let me clarify... I'm not doubting your figures (as in your experience, this may be the costs you've seen), but one of my buddies owns a CD and DVD duplication business. They're pressing DVD's at around $0.28 per disc (cost). While he does not do the art printing or case stuffing, he says that most non-premium art (the wrap-around art for cover, spine and back) only costs about a dime to print. The cases (generic black) are less than a dime as well.

This means that the cost of materials is less than $0.50.

To him probably, yes. You're also not counting in warehousing, shipping, and other overhead. I'm pretty sure that my final figure is accurate anyway. There's plenty of pressing places right now offering BR pressing in the lots that the studios are doing now, say 5000 discs is a nice average per run right now

http://www.proactionmedia.com/blu-ray_replication.htm

Let's say a 25% premium for BD-50. I think that's reasonable at this time. For DVD-9 now it's a 10% premium.

http://www.proactionmedia.com/blu-ray_replication.htm

so for 5000 discs is $1.99 each, plus $0.62 for the case, plus setup fees, plus artwork, plus printing/shipping/storage/advertising

Yeah, I feel safe with my $3.50 each number.

Now, if you factor in the profit that these companies add to their pressing (because no one's pressing their own... Sony Pictures doesn't have a DVD duplication facility in their basement),

Actually they do in Japan, that's why BD-50 had to be made there at first.

This is why places like Fry's and Amazon and other retailers put some BD movies on sale for $12-$15... and don't think for a moment they're losing $$$ on those sales, either.

Actually it's a cross-promotion with the studio, and the studio sells them the titles at that cost (or re-imburses for existing stock). They're not losing money, but they're making pennies on them. It's a loss-leader to get people in the store.

Now that part I know a lot about, because I used to be a video buyer for Tower.