Where is the profit in all these BOGO's?

[greekjgg]

I'm all for great deals on movies but what is the point in selling these titles on Amazon for $10 a piece? Somebody explain the math to me?

I just bought the first 4 Potter movies for $40 including shipping. I ALMOST jumped on the boxset back in Dec.

How can they afford to sell new releases for $10???

[JJ]

Short term loss, long term gain?

[bhampton]

I don't know what the profit margin is.

I do know it's promotional and once people start buying Blu Rays they are likely to keep buying Blu Rays.

These BOGO's make a big difference on my shelf.

-Brian

[greekjgg]

Originally Posted by JJxiv1215

Short term loss, long term gain?

Only if Amazon isn't taking the loss!!

I mean, $10 off, then BOGO? Doesn't this diminish the value of Blu? I would hope that the price does come down some once the market adopts, but this also sets a precedent too. Many will be spoiled by these CRAZY bogo's!! THis isn't just a Bogo, your also saving $10 a disc too!!

[Kristin Simard]

I've wondered about that. Like the way books retail for $ 25-30, then months later are remaindered for $5. (or pounds or euro)

So what is the real price of a book or a blu-ray? I think they sell them first at "retail" to capture sales from those who will pay "anything". Then they lower the price through "sales", then they are "remaindered".

The real price is probably an average of these.

[Downhere]

Originally Posted by greekjgg

Many will be spoiled by these CRAZY bogo's!!

Pretty much. It's getting to the point where I will wait for a BOGO before buying movies.

[Pilam69]

After expenses I am sure that they are still making some money somewhere, either by banking the sales or by encouraging purchases of lesser selling titles.

I would also be willing to bet that they are more concerned with growing the market at this point than actual profit taking. DVD will more than cover any BOGO expense on any BD title. At the end of the day most companies will bank the DVD and BD money at the same time with the same division so they profit or loss from BD will be severely diluted. Especially when you consider that even good selling BD titles are in the 10's of thousands while DVD is still in the multi-millions.

[Paden]

Originally Posted by greekjgg

Only if Amazon isn't taking the loss!!

I mean, $10 off, then BOGO? Doesn't this diminish the value of Blu? I would hope that the price does come down some once the market adopts, but this also sets a precedent too. Many will be spoiled by these CRAZY bogo's!! THis isn't just a Bogo, your also saving $10 a disc too!!

I'm certain the studios (or BDA) are subsidizing these sales. The original discount is just Amazon but the 2'fer is likely a push to show numbers that benefit the BDA. So, I guess you could say we're helping them while they help us.

[gearyt]

I am sure that the cost of mfg is low, and they make it up on qty.
but the real reason is the advertising... It cost's way more to get someone into a store, convince him to buy your stuff, etc. It is a smaller cost to them to have a single format and reduce their costs in the bigger picture. It costs much less to ship a order of 10 of one format that it costs to ship multiple orders of multiple formats ( order processing, billing, picking, shipping, etc ). Look at what the sale has done to hardware sales

[Mayor Quimby]

CD's and dvd's cost less than $1 to manufacture. Blu-Ray discs may cost a few cents more to produce but then again, there are no booklets to print so it probably evens out. The real expense is in marketing, distribution and advertising. Overall, they're probably below $7 or $8. Anything above that is profit. I also know that the retailers don't make much at all on these things. The labels keep most of the profits (hence the high price of cd's in stores ~ $17 - $18). Retailers like BB stock them to get people into the stores much like deli's sell cigarettes basically at cost in the hope that a customer will buy a stick of gum or some milk.

[SVTRacer]

Originally Posted by Pilam69

After expenses I am sure that they are still making some money somewhere, either by banking the sales or by encouraging purchases of lesser selling titles.

I would also be willing to bet that they are more concerned with growing the market at this point than actual profit taking. DVD will more than cover any BOGO expense on any BD title. At the end of the day most companies will bank the DVD and BD money at the same time with the same division so they profit or loss from BD will be severely diluted. Especially when you consider that even good selling BD titles are in the 10's of thousands while DVD is still in the multi-millions.

I've been thinking along these same lines. At this point Blu-ray is still a very small part of their home video sales compared to DVD. Even if they take a loss on some of the BD sales, it will have an insignificant impact financially. The benefit to us, however can be pretty substantial.

[sj001]

Enjoy them while they last, once this war is over, I don't think you will see BOGOs much anymore.

[Kristin Simard]

Originally Posted by Mayor Quimby

CD's and dvd's cost less than $1 to manufacture. Blu-Ray discs may cost a few cents more to produce but then again, there are no booklets to print so it probably evens out. The real expense is in marketing, distribution and advertising. Overall, they're probably below $7 or $8. Anything above that is profit. I also know that the retailers don't make much at all on these things. The labels keep most of the profits (hence the high price of cd's in stores ~ $17 - $18). Retailers like BB stock them to get people into the stores much like deli's sell cigarettes basically at cost in the hope that a customer will buy a stick of gum or some milk.

...and movie theatres make most of their profits from candy, popcorn, soft drinks etc., not from ticket sales.

[Mayor Quimby]

Originally Posted by Kristin Simard

...and movie theatres make most of their profits from candy, popcorn, soft drinks etc., not from ticket sales.

You think?!!! Last movie I went to see (3:10 to Yuma) it cost more than the ticket price just for some popcorn and soda!

Sons o'...

[Living Near Shamu]

Originally Posted by Mayor Quimby

You think?!!! Last movie I went to see (3:10 to Yuma) it cost more than the ticket price just for some popcorn and soda!

Sons o'...

This is true. I've gotten the "popcorn, hotdog, 2 drinks, $17.50" look

[DetroitSportsFan]

Originally Posted by sj001

Enjoy them while they last, once this war is over, I don't think you will see BOGOs much anymore.

I agree. They will go the way of the Dodo, except for maybe really old releases.

[hc666]

I['m sure there is a big mark up on retail price vs what it costs to make.

They are making their money still. Just not as much, short term loss for long term gain.

[Trean]

Yeah I don't think they are losing money on the deals, they might be eating into a bit of profit (the studios) to subsidize these deals but in the long term it will be well worth it.

I mean I have been buying dvds for like 2.50-7.50 for years; and newly released for 9.99 or so sometimes a few weeks after release.

[Clark Kent]

In the case of the Potters I think it's a simple reason of Warner overestimating demand for them. Every retail store I go to has literally hundreds of extra copies of various Potters. I was at a Best Buy and 1/4 of their entire Blu-ray stock was Potter. Now that we are moving pass the Christmas season retailers don't want to be stuck with movies that aren't going to move and studios don't want to take the stock back, so they cook up these bogos and sales to move product from the retail channel.

Other reasons exist of course like an escalation in the tactics being used to win the format war. The BDA proved these types of sales are very popular when they beat Transformers and so the HD DVD braintrust copied it. They are not losing money on these sales. The only thing happening is they are making less profit than they could have.

[JackStraw]

Originally Posted by sj001

Enjoy them while they last, once this war is over, I don't think you will see BOGOs much anymore.

Exactly. We saw stuff like this in DVD's infancy where you would send in your UPC for a free DVD off of a list. I don't think that DVD went to this extreme but they most certainly had their offers back in the later 90's.

I took advantage of the Potters on this BOGO. I'm kind of hoping that Order of the Phoenix will be in another BOGO, because with all of the movies I have on backlog I can afford to wait. However once this war starts to shift one way or another these BOGO's will come to an end. That's why I pretty much intend on hopping on any BOGO I can at this point. I know once HD DVD is out of the picture that the days of these deals will most certainly be numbered.

Basically don't get too comfy with them.