Fair price & profit for a DVD?

Vox Pop of the Week:  Listen to what Dale Sinden 2UE, Film Reviewer, Producer, Distributor, has to say about film and TV  piracy in Australia.

We wanted to address the latest comments in regards to what is a fair price for a DVD and what is a reasonable profit for the distributor/rights owner.  For this post, we will only be talking DVDs in the blog, any comments regarding CDs we will leave.  Our guest blogger this week is Simon Bush, CEO of AVSDA (Australian Video Software Dealers Association).

Here are the facts

• Fact One: In Australia, over 90 per cent of DVDs sold are manufactured in Australia mainly through the big three replication factories of Technicolour, Sony DADC and Regency Media.  These businesses have substantially upgraded their production facilities to also be able to manufacture high definition Blu-ray DVDs. These facilities are large local employers and investors in capital. The whole supply chain of manufacturing, printing of covers, marketing, distribution, merchandising and sale of DVDs takes place in Australia. The majority of DVDs do not get imported from China.
• Fact Two:  Just talking movies, 6 out of 10 Hollywood movies make a loss and the number is even more challenging for local and independent productions.   For studio based businesses, it is up to the remaining 4 films to recoup losses and turn a profit – each studio hopes they will distribute a major blockbuster or two each year to cover the other costs and loss making films, especially to cover the continuation of their art house/independent based sides to the business.  For local and independent productions the main objective is, at the very least, to recoup investor’s outlay.  Unfortunately the global financial crisis, along with the growing global piracy issue, has forced the scaling back of many movie projects and the closure of some of the art house and independent backed film production companies. Movie and TV making is a high risk endeavour.  The appetite for that risk by investors has thus decreased.

In terms of DVD prices, many of you are curious as to what is a fair price? For a film costing millions to make, and creators years of their life as well as their own personal finances, is paying around $22 for a new release film through a local store too much? That’s a matter of opinion I guess but the creators,  the production team and the investors in the film do need – and should – get a fair return.

Today, within weeks or a few months that  DVD will be discounted to $15 and under whereas, in previous years, the shelf life of a new release film, at the full price, was closer to 4-6 months. Catalogue (older) DVDs are regularly sold for sub $10 dollars. This is simply competition and the global nature of distribution which is the reality and in the end benefits consumers.

So what then is a fair price and a fair profit and is $10 too much for you to pay for a film which costs a lot of money and people and time and hard work to make plus it carries a high investment risk? Ultimately that’s for the consumer to judge.  However, if you don’t wish to pay at any price, accessing or buying a pirated copy is not the answer; this is just taking someone else’s creative work and investment without paying.

Another fact is DVD sales in 2010 will likely show a decline of around 12 per cent which is a steep decline in one year.  Why?  Lots of factors no doubt – but with 53% of the population pirating this could and will impact on local jobs and manufacturing levels.  That is a fact.

If we give DVDs for free or make no profit then were pretty sure piracy may decrease but – a commercial fact is – few films will get made  because no one would want to invest in a film production that has no chance of making a return. Film making is a business like anything else and for that we don’t apologise.  The disappointing thing would be the loss of great Film and TV stories from Australia and around the world that add so much value and entertainment to our culture.

Thanks Simon!

What are your thoughts on the fair price for a DVD?