lvc@cbscc.UUCP (Larry Cipriani) (05/06/85)
Why are prerecorded tapes (specifically movies) so expensive? It seems to me (and friends I've talked to) that by keeping their price high, piracy is encouraged. More money could be made by selling more tapes at lower prices than a few tapes at high prices, thats just elementary economics. Many movies I would like to own cost over $60.00 to purchase. If I want it I'd have to tape it off of t.v., or be dishonest and copy a rental tape. If they cost, say $20.00 I'd consider buying. Is Hollywood just stupid or is there a sound economic reason that I missed ? Are Americans so honest that piracy will never force the prices down ? Larry Cipriani cbscc!lvc
root@vortex.UUCP (The Superuser) (05/07/85)
One factor is the fact that (for all practical purposes) most videotape duplicating is done in realtime. With discs, you just stamp them out. With audio tapes, you can do high speed duplication. But for helical video, there are major problems with high speed duplication and most (if not all) of the manufacturing is done in 1:1 realtime. This is a slow process, and it is reflected in the costs. --Lauren--
wmartin@brl-tgr.ARPA (Will Martin ) (05/08/85)
In article <654@vortex.UUCP> root@vortex.UUCP (The Superuser) writes: >One factor is the fact that (for all practical purposes) most videotape >duplicating is done in realtime. With discs, you just stamp them out. >With audio tapes, you can do high speed duplication. But for helical >video, there are major problems with high speed duplication and most >(if not all) of the manufacturing is done in 1:1 realtime. This >is a slow process, and it is reflected in the costs. >--Lauren-- The thing is that SOME tapes are retailed at $39.95 list, while others have lists of $79.95, or $89.95, etc. If a company can make money duplicting and selling any one tape at $39.95, they can just as easily sell ALL tapes for $39.95. And these are current, high-return- to-the-participants tapes. Old movies retail for $11.95 at K-Mart. I think I can use your argument against you -- if you have to make real-time duplicates, it is just as easy to switch the master any time and make different tapes; with high-volume stamping, it costs more to stop the line and change the master to make different items. So real-time duplication could lead to it being as easy to make many different tapes, all at the same low cost. The only higher cost factor would be that the per-item printing costs for the sleeves would be higher (25 cents instead or 5 cents, maybe? piffle!). So there should be a wide variety of tapes available at the lower lists (like $39.95 for newly-released movies). Will
brown@nic_vax.UUCP (05/09/85)
> One factor is the fact that (for all practical purposes) most videotape > duplicating is done in realtime. With discs, you just stamp them out. > With audio tapes, you can do high speed duplication. But for helical > video, there are major problems with high speed duplication and most > (if not all) of the manufacturing is done in 1:1 realtime. This > is a slow process, and it is reflected in the costs. > > --Lauren-- That doesn't explain why Paramount has such great prices. They use B&H/Columbia for duplication. B&W does lots of other companies tapes as, for higher prices. -- |------------| | |-------| o| JVC HRD725U Mr. Video | | | o| |--------------| | | | | | |----| o o o | | |-------| O| |--------------| |------------| VHS Hi-Fi (the only way to go) (!ihnp4!uwvax!astroatc!nic_vax!brown)
man@bocar.UUCP (M Nevar) (05/10/85)
<The thing is that SOME tapes are retailed at $39.95 list, while others <have lists of $79.95, or $89.95, etc. If a company can make money <duplicting and selling any one tape at $39.95, they can just as <easily sell ALL tapes for $39.95. And these are current, high-return- <to-the-participants tapes. Old movies retail for $11.95 at K-Mart. < <I think I can use your argument against you -- if you have to make <real-time duplicates, it is just as easy to switch the master any <time and make different tapes; with high-volume stamping, it costs <more to stop the line and change the master to make different items. <So real-time duplication could lead to it being as easy to make many <different tapes, all at the same low cost. The only higher cost factor <would be that the per-item printing costs for the sleeves would be <higher (25 cents instead or 5 cents, maybe? piffle!). So there should be <a wide variety of tapes available at the lower lists (like $39.95 for <newly-released movies). Well, it costs the vendor more for the right to duplicate these tapes as well. They have to get back their initial pay-out. They do this by charging more. I still agree with you. They'd probably make more at the cheaper price because of volume. But, they probably charge more because they pay more for the rights. Mark Nevar
brad@rtech.ARPA (Brad Bulger) (05/12/85)
> Why are prerecorded tapes (specifically movies) so expensive? > It seems to me (and friends I've talked to) that by keeping their > price high, piracy is encouraged. More money could be made by > selling more tapes at lower prices than a few tapes at high prices, > thats just elementary economics. The primary reason that prerecorded tapes are (for the moment) so expensive is that for most of the releases, the sales are made to rental club operators. Each sale represents the equivalent of 10 - 20 rentals. Call it an eventual audience of 40 people. I don't know what portion of a movie ticket goes to the studios, but if you figure they get at least $2 out of a $5.50 ticket, that's $80 they'd be making from those 40 people under "normal" conditions. Of course, the reason the only people who buy movies are rental clubs is that the movies are too expensive... I think the studios are holding out for a revision in the first sale law - something that would give them a cut of rental proceeds. Then prices would go down as rental fees went up (to preserve the clubs' margins). It would be more attractive to buy then, which cuts down the "lost" revenue per tape on average, PLUS they'd get a cut of the rentals anyway.
garyh@iddic.UUCP (Gary Hanson) (05/12/85)
<>
First, just as in the world of commercial software, the production costs
of a tape have little to do with the price of the finished product. I think
that the main reasons tapes are so expensive is:
Market forces: Hollywood isn't so stupid that they won't let you spend
lots of money for their product. Enough people are willing to spend $80 for a
tape that they have little incentive to charge less.
Greed: Tape prices are inflated to make up for the revenue they think
they are 'losing' to rental stores. The studios have always been irked that,
by law, you are free to do what you want with a tape (except copy it)-- like
renting it to people. In theatrical distribution, the theaters rent the copies
from the studios, and the studios have complete control over when and where
their product is shown, and guaranteed revenue from each booking. You may have
noticed that, while videodisk prices have gradually risen to nearly the same
levels as the less-expensive tapes, disks are still less expensive than tapes.
This is because a) there is no significant rental market for disks, and b)
disks are not counterfeited.
Jack Valenti, friend to video-lovers everywhere :-) has promised that if
the first-sale doctrine is repealed (thus making it illegal to rent tapes,
except through the consent and control of the studios), and there is a blank
tape tax (aaaarrrrggghhh - to make up for the revenue 'lost' by people taping
off the TV), then prerecorded prices will drop. Disney and a few other studios
have said the same thing. While the efforts of Hollywood greedheads to enact
these laws have thus far failed, it is possible that these 'people' (and I use
the term loosely) may succeed in their efforts. BEWARE! They were able to
stop record rentals, but Warner Bros. tried to go to a rental-only system for
their videotapes a few few years ago, and were forced to abandon it. The
acting president of the U.S. has generally been quite sympathetic to the
greedheads interests thus far.
Without eternal vigilance, it could happen here. (Joe Bob)
Gary Hanson Tektronix IDG ...!tektronix!iddic!garyharcorp@utcsri.UUCP (Alias Research Corporation) (05/14/85)
> <>
At the risk of being called an un-person, I will have to agree
with Jack Valenti.
Consider this. You have developed a piece of software, sold it to
someone, and that person rents it to others without giving you any of
the rental fee. Those who rent it often copy it. You have no right to
tell the dealer to stop renting it.
The movie industry sees itself in such a situation with their
product. Can you blame them?
Whenever you purchase a video[tape|disc] you are not only filling the
coffers of the studios, but supporting an art form as well. Sure, the
studios are big, but they take enormous risks as well. United Artists
went bankrupt after "Heaven's Gate".
These studios employ artists and technicians who have sacrificed
steady jobs in order to work in the film industry. These individuals
suffer through many "lean years" before they post a net gain. Your
contributions keep these talented people interested in making the films
you enjoy.
Older films require storage and care. They are looked after by the
studios who own them. In this area, the studios have been negligent.
They have carelessly lost significant portions of what can be regarded
as our culture. For this reason they must be made accountable for
such behavior before we give in to their demands.
Jack & Co. should be forced to fund a museum devoted to the preservation
of motion pictures. Such a museum must have the right to any prints of
motion pictures (or video) that is owned by any member of the MPAA.
Finally, the studios should recognise that it is their responsibility
to release *all* of their films, regardless of their market potential.
If they are allowed access to us as a market, then they should take a
loss on occasion and make available the movies that some people await.
A deal should be struck between the public and the MPAA. It would
probably benefit us all in the long run if both sides recognised their
obligations.
Stephen Y. Trutiak ( I Like LV )
Alias Research Corp.
{ allegra! utcsri! alias! strutiak }doug@terak.UUCP (Doug Pardee) (05/14/85)
> The studios have always been irked that, > by law, you are free to do what you want with a tape (except copy it)-- like > renting it to people. I don't have any special "inside info", but it seems to me that the studios tolerate the video rental stores because those stores form a guaranteed market. A studio can release a movie that had absolutely terrible box-office revenues, and still be guaranteed of selling a million copies of the video tape, one to each rental store (sometimes two, 1 VHS and 1 Beta). Sort of covers their bets on the stinkers, at the cost of some lost revenue on the winners (which they aren't *forced* to make available on tape until they're darn good and ready, e.g. the Star Wars trilogy). -- Doug Pardee -- Terak Corp. -- !{ihnp4,seismo,decvax}!noao!terak!doug ^^^^^--- soon to be CalComp
mag@whuxlm.UUCP (Gray Michael A) (05/15/85)
> Why are prerecorded tapes (specifically movies) so expensive? > . . . . > Many movies I would like to own cost over $60.00 to purchase. > If I want it I'd have to tape it off of t.v., or be dishonest and > copy a rental tape. If they cost, say $20.00 I'd consider buying. > > Is Hollywood just stupid or is there a sound economic reason that I > missed ? Are Americans so honest that piracy will never force the > prices down ? > > Larry Cipriani > cbscc!lvc There is a *logical* economic reason, and in some cases, it is also a sound economic reason. Very simply, the producers of videotapes attempt to price their products in such a way that their profit is maximized. For example, if I can sell 1000 copies of a videotape at, say, $70, $30 of which is profit, or 2000 copies at $25, $10 of which is profit, I will price at $70, since that will give me $30,000. At the $25 price, I would only make $20,000. Therefore, I'd have to be stupid to price the film low. The problem is in guessing the shape of the supply-demand curve for a given film. If demand is inelastic, then a high price is desirable. Otherwise, a lower price is desirable. Paramount was the first major producer to experiment with low prices. Several major features were released at $39.95 initially (e.g. "Terms of Endearment") instead of the more customary $69.95. A Paramount executive stated in an interview that their cost structure was such that a sales at $40 must be three or more times greater than sales at $70 in order for Paramount to make more profit at the lower price. Other companies have been slow to follow, since they are not convinced that Paramount's guesses are correct. After all, we can never be sure how many copies of "Terms of Endearment" would have been sold at $70. However, as the companies gain marketing experience and data, we will probably see more makers jump on the low price bandwagon. I personally have purchased about 10 films at $25 or less that I would not have paid more for, and most people I know say they would buy more films if the prices were low. I do know of one film that I would pay $300 for, even if I had to abide by an agreement to never show it to anyone. There are a few that I would gladly pay $100 for, but they aren't in release. I keep hoping. Mike Gray, BTL, WH
doug@terak.UUCP (Doug Pardee) (05/16/85)
> The primary reason that prerecorded tapes are (for the moment) > so expensive is that for most of the releases, the sales are made > to rental club operators. Each sale represents the equivalent of > 10 - 20 rentals. Call it an eventual audience of 40 people. I > don't know what portion of a movie ticket goes to the studios, > but if you figure they get at least $2 out of a $5.50 ticket, that's > $80 they'd be making from those 40 people under "normal" conditions. Although I'd believe that the studios think this way, it isn't the way that things are. The reason that I don't go to the movies much is not because I can rent the same movie next year for less. I wouldn't go even if I could never see the movie anywhere else. If the studios want to get me back into the theaters, they've got their work cut out for them. They're going to have to start making movies that I want to see, charging prices that are appropriate (for a really good movie, current prices are okay), and cleaning up the act at the theater. They're kidding themselves if they really believe that rentals are responsible for box-office drain. -- Doug Pardee -- Terak Corp. -- !{ihnp4,seismo,decvax}!noao!terak!doug ^^^^^--- soon to be CalComp