Pricing and sale pricing

[Lunchbox]

I was curious if anyone can state why there is such a huge difference in pricing between digital media and physical. I've noticed for instance Aliens blu-ray at a regular price of 9.99(Best Buy), though the digital on Vudu is 22.99. (Wal-mart Blu-ray 16.95) This is just one example. I would assume digital pricing would be more competitive with Blu-Ray since there are no manufacturing costs.

[Nygiantsfan3342]

Re: Pricing and sale pricing

The 6-disc Alien Anthology blu-ray is on sale for $29.99 at Best Buy now

[MaxH]

Re: Pricing and sale pricing

That's true, Lunchbox, but I think the two main factors keeping digital copy pricing high are:

1) There is no excess inventory to sell at a discount (why we see Blue Bin or other clearance specials)

2) Disc and digital copy rights are usually sold by two different entities. Doesn't make sense, I know, but from what I understand the two are basically sold like different movies. Yes, they should be competitive, but the business unit selling the digital copy wants to squeeze as much profit out of it as they can, they're not trying to compete or compare their sales with disc sales.

[Lunchbox]

Re: Pricing and sale pricing

That does make sense. Thanks for the information.

[jeremymc7]

Re: Pricing and sale pricing

Like everything else with this. Complex and contracts.

The digital stuff is more complex then physical. In the store you are not ADVERTISING so in (most) cases you can sell for whatever you want. On the web your storefront is ALSO your advertisement, unless you require people to log in, add to cart, and start checkout. Vudu shows you purchase pricing without that so they are bound by Minimum Advertised Pricing, if it exists. Not overaly common for movies but it does exist and factor in.

Stores also use cheap things like movies to get you to buy more, or other things while you're there. In all likelihood you will. Vudu only sell's movies. They can't make money selling you a new TV or Car Stereo.

[lynxal@bellsouth.net]

Re: Pricing and sale pricing

I honestly think that digital copies should be a lot cheaper than physical copies there is no production cost as is with physical copies. come on they use the digital copy to make the physical copies for gods sake. no trees killed no plastic to ruin the environment. just my two cents

[Lunchbox]

Re: Pricing and sale pricing

I honestly think that digital copies should be a lot cheaper than physical copies there is no production cost as is with physical copies. come on they use the digital copy to make the physical copies for gods sake. no trees killed no plastic to ruin the environment. just my two cents

I agree with you on that.

[MaxH]

Re: Pricing and sale pricing

I honestly think that digital copies should be a lot cheaper than physical copies there is no production cost as is with physical copies. come on they use the digital copy to make the physical copies for gods sake. no trees killed no plastic to ruin the environment. just my two cents

You're assuming that most of the cost of a physical copy is distribution, and that digital distribution is free for the distributor. While you're correct that the distribution costs are lower, you've oversimplified and made huge assumptions. I highly recommend this article if you're interested in learning a bit about digital content distribution: http://scholarlykitchen.sspnet.org/2...al-publishing/

[jeremymc7]

Re: Pricing and sale pricing

I honestly think that digital copies should be a lot cheaper than physical copies there is no production cost as is with physical copies. come on they use the digital copy to make the physical copies for gods sake. no trees killed no plastic to ruin the environment. just my two cents

Digital is for the most part cheaper. But as I alluded to in my previous post it's a completely different ball game.

• In store pricing on physical media usually has no legal / contractual restrictions.
• Online pricing on digital media usually DOES have legal / contractual restrictions.

• In store physical media is often used by stores as "loss leaders" to sell other product.
• The concept of "loss leaders" doesn't work very well for a virtual store, especially when it only sells one type of product, digital media.

• Physical Media sales are still a large portion of Studio sales, compared to Digital Media and Physical stores (and major retailers Amazon) are still the largest accounts for Physical media.
• Studios don't want to upset MAJOR accounts who sell tens or hundreds of millions annually of physical media that they use to drive people into their stores (or to their website Amazon) by allowing Digital Media accounts to sell at whatever price they want.

• Studios see digital media as an emerging market with risk and require more profit to cover risk
• Studios see digital media as a newer / higher tear product which they can always charge a premium for, especially to early adapters.

I'm not saying it's right. I'm saying it's business and that with some or all of those points and many others is how they view the business.

[insanityfan]

Re: Pricing and sale pricing

Another thing to consider is the IT cost associated with the initial purchase and upkeep of large disk arrays - called SAN's (Storage Area Networks) or NAS's (Network Attached Storage). I worked for a large IT shop and about a year before I left, our whole shop migrated from standalone server based internal storage to these monster pools of disk storage. The one we bought from EMC was their top of the line Symmetrix model, and 4TB of storage to start with. That cost us $5 million just to get the thing, and 4TB used up 4 of 6 "managers" they called them so we had some growing room. All of our Windows, Unix, AS/400, and Linux systems went to using this. Our yearly software/hardware maintenance was going to run about $500k per year. The point of me telling you this is that 4TB is NOTHING compared to the amount of storage that Vudu has to pay for up front to host each movie. Then, each movie has 3 copies! HDX, HD, and SD. Although there is no manufacturing costs for DVD's, the cloud is very expensive. Also something else people do not consider unless they have worked in IT, is the ongoing software and hardware maintenance of these storage pools. SO even if Vudu sells you a movie today - and it "lives" in the cloud - eventually they will be losing money as time goes on because of these ongoing escalating software/hardware costs. Another thing to consider even if you are not an IT person (and most people know this by now) is that technology moves fast. The "shelf-life" of these disk systems at most runs about 10 years, then they have to migrate to new SAN/NAS, so even if they make all their money back to pay for their initial purchase of this storage, they have to do it again because EMC/IBM/whoever removes their old systems from maintenance. Even if they lease the disk space from another company, SOMEONE is eating these costs - and I think this is why it seems digital copies of movies seems to be going up. At any rate very long story here but this is why digital will always remain high in my humble opinion.

[Lunchbox]

Re: Pricing and sale pricing

Another thing to consider is the IT cost associated with the initial purchase and upkeep of large disk arrays - called SAN's (Storage Area Networks) or NAS's (Network Attached Storage). I worked for a large IT shop and about a year before I left, our whole shop migrated from standalone server based internal storage to these monster pools of disk storage. The one we bought from EMC was their top of the line Symmetrix model, and 4TB of storage to start with. That cost us $5 million just to get the thing, and 4TB used up 4 of 6 "managers" they called them so we had some growing room. All of our Windows, Unix, AS/400, and Linux systems went to using this. Our yearly software/hardware maintenance was going to run about $500k per year. The point of me telling you this is that 4TB is NOTHING compared to the amount of storage that Vudu has to pay for up front to host each movie. Then, each movie has 3 copies! HDX, HD, and SD. Although there is no manufacturing costs for DVD's, the cloud is very expensive. Also something else people do not consider unless they have worked in IT, is the ongoing software and hardware maintenance of these storage pools. SO even if Vudu sells you a movie today - and it "lives" in the cloud - eventually they will be losing money as time goes on because of these ongoing escalating software/hardware costs. Another thing to consider even if you are not an IT person (and most people know this by now) is that technology moves fast. The "shelf-life" of these disk systems at most runs about 10 years, then they have to migrate to new SAN/NAS, so even if they make all their money back to pay for their initial purchase of this storage, they have to do it again because EMC/IBM/whoever removes their old systems from maintenance. Even if they lease the disk space from another company, SOMEONE is eating these costs - and I think this is why it seems digital copies of movies seems to be going up. At any rate very long story here but this is why digital will always remain high in my humble opinion.

Thanks for the information. I had not idea or thought of the other side of this and it's understandable now.