Why did movie rental streaming prices increase?

[MatthewB]

Okay so lets say Ironman 3 is being released and each Wal Mart store is getting 100 copies (which is about the norm according to a Wal Mart employee I once asked when he ran out of a title I wanted). So. Each store gets 100 copies. There are currently 4,069 Wal Mart stores nationwide so with simple math that equates to 406,900 copies Wal Mart alone buys. If in theory 100,000 copies is about 1.00/ each than WalMart in theory should pay about 30 cents per copy for their bulk buy. This is of course after licensing fees and studio fees. Which is a paltry sum they pay in revelence to the profit they will make on each disc just on the week the disc is released.

Bats I read everything so when I came up with that 1.00 figure I was basing it on articles I have read and used that as my Stats and didn't just pull that number out of a hat. Thank you very much.

 

[Towen7]

How much it costs to produce a disc is irrelevant.

Your knowledge of how retail works is lacking or you simply choose to ignore Walmart's cost for the disc, shelf space, advertising, salaries, utility bills, shipping, distribution, inventory processes, loss prevention, etc. etc etc.

 

[heeman]

At this point, it may be in the best interest to agree to disagree :angry-tappingfoot: ?

 

[Flint]

Matt - this is basic concept to running a business. Please watch this video before you post anymore nonsense about costs versus profits:

[youtube]http://www.youtube.com/watch?v=Mi1QBxVjZAw[/youtube]

 

[MatthewB]

How much it costs to produce a disc is irrelevant.

Your knowledge of how retail works is lacking or you simply choose to ignore Walmart's cost for the disc, shelf space, advertising, salaries, utility bills, shipping, distribution, inventory processes, loss prevention, etc. etc etc.

Okay let's take Wal Mart out and replace it with Amazon.


Flint nice video but there's a big difference between an item that costs 1.50 that generates 10 cents in profit and a disc that generates ( for the sake of argument and redacting all of Toms fees to run a store say 3.00 per disc for costs to run a store and you still have 21.00 per disc in profit). For Bats I came up with the cost of 4.00 per disc based on Best Buys 4.99 after trade in cost figures. 1.00 for cost to produce disc, 3.00 for cost of shipping, storage, advertising and cost to run a store. Best Buy still needs to make a profit so lets allot 1.00 profit after the trade in has been reduced. So take movie "XYZ" when it came out this week Best Buy anally raped the consumer on price because in nine months that movie will be 4.99 after disc trade in. Nothing has been changed about the product whatsoever. Same movie only difference is Best Buy is charging you more to see it now instead of waiting. With all that profit compared to buying it in the bargain bin, is Best Buy going to be giving extra money to the studio? Production company? Director or stars? No you guessed correct. They still make a profit when sold at 4.99 as compared to 24.99 only difference is when you buy it.

My gripe is I'm tired of paying premium prices for movies that stink and now I can sample the movie before I buy it. If the movie is really really good I'll pay the outrageous 24.99 price on the first day. If good I'll wait till I get it on close out prices if the movie sucks than nobody gets my money and hopefully studios will put out a better product.

Guys I have a fairly good understanding of how business works was in Junior Achievement and FBLA in high school and took business courses in college so I have a theory of how things work get produced and cost. Your guys gripe is you consider what I do stealing where as I considering it making an informed decision on my purchase. Much like a car I'm testing it out before I purchase. If the car drives like shit I'm not buying if I like how the car drives I'm buying it. Same basic principle.

I'm sorry that Best Buy will not get my 24.99 on Oblivion but better they be pissed off than me if I had not seen the movie beforehand and blind bought this movie.

 

[Flint]

Matt, if you stated things which made sense at all in terms of how business works then we wouldn't all be telling you that you are wrong. I really think you truly do not understand how business actually works.

You claim Best Buy is getting a huge profit, but the company is on the verge of bankruptcy. Where's the profit going? Also, the cost of anything that is very inexpensive to manufacture is in the supply chain. The cost of the store, purchased inventory which never sells, air conditioning, returned items (most of which never get resold, ever, despite the returns rack at some stores appearing to be large), credit fraud, lost and stolen merchandise, advertising, salaries, union wages, insurance, taxes, and so much more. The sheer cost of doing business probably consumes 80% of the difference between the cost of goods sold (COGS) and the retail price.

As for a new movie title costing more the week it comes out rather than a year later, that is a simple discussion of market demand. People will pay more the week something comes out. If you don't like it, shut the hell up and wait for a better price. I taught my son that with PS3 games. It took a year, but he learned he could wait just a couple of months and buy a used copy of the greatest new game for a third to a quarter of the original new retail price. He loved doing it that way as it allowed him to enjoy more games for the same money.

You can wait Matt. I know I do. I often wait years to watch a movie. I find it makes them much, much more enjoyable and even cheaper.

 

[Srvy]

My thoughts is why not when you go to a Dickinson or AMC theater to see a Movie you have a choice. To purchase a code to stream or a discount for a Blueray when they are released? This is a substantial discount for seeing the movie first. It is only available a one time offer for the date of the ticket stub. It can only be redeemed once. Would also give the industry a valuable research tool in to what consumers want. Just throwing the ball around here.

As for torrents sites how do you keep virus free i wouldn't touch then with a 100' pole.

 

[MatthewB]

Flint I do agree with you and others and I mentioned you guys have valid points. I think I may have one or two myself. As mentioned we'll just have to agree to disagree. I still respect all of you in this lively debate (things were getting boring around here lately, glad I could stir the hornets nest with my comments).

Now excuse me gonna watch another downloaded movie to see if I'm gonna buy it or say it sucks. :teasing-tease:

 

[Kazaam]

I've seen a couple of times (or more?) on Vudu where they offer extended 10 minute (I think it was) viewings of the movie. Usually though I think previews are only 2 minutes long. Hardly long enough for considering how many movies are slow to start as far as storyline goes.

 

[Rope]

Rental streaming prices have sky rocketed because Matt keeps stealing all the GD movies. :happy-smileygiantred:

Rope

 

[Towen7]

Guys I have a fairly good understanding of how business works was in Junior Achievement and FBLA in high school and took business courses in college so I have a theory of how things work get produced and cost.

It you think there is $21 in profit for a BD sale than I question your understanding of how that business works.

 

[Haywood]

If the movie is really really good I'll pay the outrageous 24.99 price on the first day. If good I'll wait till I get it on close out prices if the movie sucks than nobody gets my money and hopefully studios will put out a better product.

This. Torrents for me are a way to "try before I buy." The problem I increasingly have with rentals is that they want nearly half the price of the movie to watch it once and that does not apply toward the purchase if you want to buy it. No thanks. If I can rent it for a buck fifty from Red Box, that's great. Otherwise, I'll just strap on the eye patch and hit Pirate Bay. If I like the movie enough to watch it more than once, I'll go buy it.

 

[Haywood]

As for torrents sites how do you keep virus free i wouldn't touch then with a 100' pole.

That is a lot less of a problem than you might think, especially if you keep your machine properly secured with up-to-date virus protection. All inbound files get scanned.

 

[MatthewB]

Guys I have a fairly good understanding of how business works was in Junior Achievement and FBLA in high school and took business courses in college so I have a theory of how things work get produced and cost.

It you think there is $21 in profit for a BD sale than I question your understanding of how that business works.

Tom I'm just talking about opening week that the Bluray is released. Flint is right about customer demand and how many ( myself at times) will pay 24.99 the first day for a movie. What your not comprehending is the major companies pay the same amount on the disc wether the disc is priced at 24.99 or 4.99 the company is still making a profit. So during the first week yes they are making a 21.00 profit as compared to a 1.00 profit nine months down the line.

If Best Buy is able to sell a movie at 4.99 and cost of disc is hypothetically 1.00 and 3.00 goes to store costs they are still making a profit at 1.00 which means when the movie first came out they are still making 21.00 on a 25.00 sale. It's basic math Tom.

Btw watched "The Call" tonight. A movie the GF wanted to watch. I did not. Never wanted to rent it or own this one. In fact it never was even a blip on my radar. So I download it for the GF and she forces me to watch it. Now it's an okay movie for me nothing special but the GF loooooves this movie. So now tomorrow after work I have to buy it at her insistence. Now if I wasn't able to watch this beforehand we never would've seen this till it came on Netflix. But now the studio is going to profit 21.00 cause the GF loved this movie. If we waited till Netflix I never would've bought this movie and the studio (and store) never would make a profit on this movie off me. Proving my point ( Hello yes you up in the cheap seats). That another download caused me to buy a movie I normally wouldn't have bought.

 

[Zing]

It's basic math Tom.

No, Matt, it's blatant ignorance!

It would seem you have completely failed to consider a number of important factors, but most disturbing is your disregard for perhaps the single most important (and expensive) factor - the content on those one dollar discs - and what it took (and cost) to have that content to put on those one dollar discs. Sure, it costs very little to produce a disc. But that doesn't mean anything over that price is profit. If you think Best Buy will buy its copies of Iron Man 3 for just a dollar each, you're a fool.

Here is some basic math for you. I'll give you a cookie if you answer correctly. I'll even make it easy for you and give you a multiple choice question.

I decide to make a CD of songs that I wrote. I pay 4 vocalists $1000 each to sing on my CD. I spend 200 hours in the studio at $45/hour to record, mix and master all the songs. I send the final master to Disc Makers and they charge me $900 for 1000 copies of my CD. How much does each CD cost to make?
A: $1.00
B: $0.90
C: $0.85
D: $13.90

BONUS QUESTION #1:

I offer that CD for sale at $15. How much profit am I making on each one?
A: $14.10
B: $25.00
C: $137.62
D: $1.10

BONUS QUESTION #2:

How many CDs do I have to sell before I start ACTUALLY making a PROFIT?
A: 1
B: 2
C: 100
D: 12,637

 

[Towen7]

The main problem problem with using one company's trade-in deal as the sole basis for calculating cost and profit for an entire industry is that its one very small piece of a very large inventory and sales strategy.

I don't have BB's financials in front of me but I do have AT&T's. Like most large companies we sometimes sell products and services at a loss. On the products side this happens for a lot of reasons. If retailer or wholesaler has an overstocked product it is now taking up valuable warehouse and shelf space. Those supply chain costs you learned about have been paid, so a decision has to be made. Do you let it sit there "hoping" that you'll eventually sell it, do you sell it at a loss, or do you bury the surplus in the desert?

Also, the studios and retailers both have a vested interest in people adopting new formats. They help spur that by incentivizing people to switch so you buy more product down the road. When you trade in a disc BB is willing to take that lost revenue and bet that you'll come back and buy other products from them at full price. It's a strategy to keep people coming in the doors of a B&M store that is struggling to stay open.

Also ... Ever wonder why BB requires you to have the DVD's case and cover sleeve?

 

[Flint]

No, Matt, they are not earning any profit on a disc selling for $4.99 They are unloading old inventory at a loss to make room for other stuff. It also draws in bargain hunters like you who might buy something priced higher with real profit tied to price.

 

[Haywood]

Flint and Zing are 100% correct on this one. Those cheap movies are loss leaders (oh how I love loss leaders).

I suspect that I am not a typical torrent user, in that I mainly use them to scout out new content. I still buy a ton of content legally and pay for a number of subscription services. If everyone who used torrents used them the way I do, they would be no threat to the movie or music industries. I've watched movies that I might otherwise not have seen and gone on to buy them because of torrent sampling. I've also watched some real turkeys that I was deeply glad I hadn't paid for. To me it is simple math: financially support the arts you care about or risk losing them. It has nothing to do with stealing (which I still think is a fatuous argument). It is a matter of patronage. The arts have always depended upon it. Support the arts. Buy content.

 

[Flint]

What you are doing, Haywood, is defending an activity which 99.9% of the people doing it are willfully breaking the law and getting something for free which they should be paying for. Most of the people who participate in Torrent downloading have come to believe what they are doing is perfectly fine and that they don't ever need to pay for digital content ever again. In fact, I know many who scoff and mock the rest of us who spend our money on content as if we are morons for not taking advantage of the free, and illegal, content in the Torrent universe.

You are making an argument that it is okay because YOU personally don't use it in an unethical way. But the act itself is still illegal regardless of your heart's intentions.

 

[Haywood]

Illegal and unethical are two completely different things. Our government has sold the consumer down the river to the point where it is illegal for me to rip a copy of a movie I own for my own personal use. Screw that. Copyrights last for a hundred years or more, which was never the original intent. People have to pay royalties to use the song "Happy Birthday" for fuck's sake. I might take intellectual property rights a little more seriously if they were not so out of control and over-reaching.