Alternative distribution to optical disks : SSD, cards, and download*

[aaronspink]

The same Walmart that will have absolutely no problems stocking big dd-only console boxes with super slim profit margins without any chance to sell any software according to you demands 100% profit margins from movies that take up little space? Someone's being inconsistent here.

Movies and media take up significant space and have significant stocking complications. In contrast, consoles themselves take up little retail space and have simple stocking calculations. It appears you don't understand how retail is actually run.

 

[AlphaWolf]

Walmart knows there's a future in DD, this is probably why they own Vudu.

 

[corduroygt]

It's obvious from studios' pricing that they do not see DD as a major platform for ownership. The sales figures back that up as well. People have gotten used to free DD (piracy) and paying money for a physical disc, that's not going to change easily or quickly.

 

[eastmen]

Movies and media take up significant space and have significant stocking complications. In contrast, consoles themselves take up little retail space and have simple stocking calculations. It appears you don't understand how retail is actually run.

Aye walmart could stock a hundred systems in the space that holds the shelving for 15 or so blurays ( 15 titles with most likely 5 copies of each)

Lets also not forget that Walmart would be selling the DD codes and since they are done on card board and have no value before they are activated its a better result for them. Card board codes has even cheaper shipping methods and you can fit dozens of them in the space of each bluray case. Not to mention since you no longer need security they can stock these cards anywhere . Even check out lanes where they get impulse purchases.

 

[TrungGap]

It's obvious from studios' pricing that they do not see DD as a major platform for ownership. The sales figures back that up as well. People have gotten used to free DD (piracy) and paying money for a physical disc, that's not going to change easily or quickly.

In India, licensed DVD's used to cost $10+ (USD). Of course, that's too high in comparison to disposable income. So piracy was to rampant...and you can buy DVD (pressed DVD) for under $1. So what did Bollywood do? Lower their price to close to that...the result? People rather buy the licensed DVD instead of buying the pirated DVD, even though the price of was still higher than pirated DVD. I'm sure if the studios release DD movies at affordable price and with none of those lame DRM's, people will pay for it.

iTunes proves this...why should people pay for music when they can download it easily for free? Downloading music is easy because it's small, plays on practically all devices and tags which allows them to search easier.

 

[-tkf-]

Walmart knows there's a future in DD, this is probably why they own Vudu.

The Future, when is that? care to take a guess at when Walmart is going 100% DD and dropping Blu-Ray and DVD? Within the next Console Generation? within the first 5 years of the next gen?

 

[Prophecy2k]

iTunes proves this...why should people pay for music when they can download it easily for free? Downloading music is easy because it's small, plays on practically all devices and tags which allows them to search easier.

iTunes proves nothing of the sort! All it proves is that there is a market for legit music downloads, i.e. people willing to pay to d/l their music online and pay a very low price per song rather than being forced to buy an entire albumn just to get one track they like.

iTunes never stopped music piracy and i don't even think it has decreased with the advent of iTunes. If anything i'd be willing to bet cold hard cash that music piracy has increased and is still increasing. It's the easiest thing to pirate for the reasons you yourself specify and thus i can only imagine how much people, even in less developed countries and nations with slower internet connections will be pirating songs by the thousands.

Anyways the latter is my conjecture, however the point still stands that there is no proof or evidence at all to suggest that music piracy has reduced globally due to iTunes being available.

 

[Silent_Buddha]

Well, here is some numbers http://www.newcyberian.com/blu-ray.html
for 100,000 blu-rays the cost is $ 1.10 per disc to a total of $ 110,000.00 for order of 100000 discs. It seems that adding a case to discs costs additional 52 sents per disc coming to a total of $1.62 per disc. This price includes the profit for the provider and hence pressing blu-ray discs has to be cheaper than this price in order for the operation to be sustainable.

I think good estimate for millions of copies can be done by extrapolating the numbers on that provider. For sony the mileage ofcourse is different as they press their own discs. Guessing that big publishers ordering tens of millions discs a year get better pricing deals than someone who just takes one time of 100k discs seems a no brainer to me.

DVD9 looks to be around 50sents for similar order sizes. So I guess that can be taken as a lower bound reachable for optical media in mass production. Casing pricing is similar on dvd and blu-ray.

And with that we're still not under 1 USD for only the disc and packaging. You also have the distribution network. The manufacturer has to ship it to the distributor. Which then has to go through customs. The distributor must then unpackage and repackage (not the individual product packaging but the shipping packaging) the product for shipment to the individual retail locations. If it's a large retailer, they can act as their own distributor. For smaller retail locations AND large retailers that need to restock between coporate restocks they must go through a dedicated distributor.

Large retails save a little by self distributing except as noted for emergency restocks. But it still requires significant costs as they'll have to have a large fleet of vehicles with attendant maintenance, manpower, and fuel costs. If they don't own their own fleet of planes they must rent space or be at a logistical disadvantage to their competitors by using rail.

Those costs may not be itemized per item sold, but it has to be factored into the profit margin of each product sold. When using an external distributor that's easy as the cost per item already reflects that price (and it is quite hefty from my work in product aquisition at a mid-size retailer in the US a bit over a decade ago, and prices would have only increased in the interim as fuel prices and wages have increased). When self distributing, it's built in as a minimum margin required for products sold unless the product is meant to be a loss leader.

In other words, the cost for manufacturing, packaging, and shipping (distribution) is far higher than 1 USD.

It's obvious from studios' pricing that they do not see DD as a major platform for ownership. The sales figures back that up as well. People have gotten used to free DD (piracy) and paying money for a physical disc, that's not going to change easily or quickly.

Studio's cannot price DD lower than retail MSRP even though it brings them a significantly larger profit margin. Pricing is in no way a reflection of whether they want DD or not.

As long as studios are reliant on the retail space for retail packaged goods, DD will have to be greatly inflated in order to avoid alienating retailers who may then choose not to carry your products.

Music and PC games are the first areas where we seem some attempts by the industry to to circumvent Retail price controls. But PC games are limited to a single month (December) where publishers can reduce DD prices below retail packaged MSRP (across their entire lineup) due to the fact that retailers know they will still sell a lot of copies due to Holiday shoppers hitting retail stores regardless of whether there are large discounts available online or not. And even then, titles released in the same month or past 1-2 months cannot be reduced in price due to retailer pressure.

Regards,
SB

 

[corduroygt]

In other words, the cost for manufacturing, packaging, and shipping (distribution) is far higher than 1 USD.

1. That manufacturer is for low volume and it's not Sony who offers the lowest prices
2. US mail for a single game is what 42 cents, and it's far cheaper to load a bunch of them in a truck to send it than an individual letter.

Your cost analysis saying it's far more than a buck is incorrect.

 

[aaronspink]

1. That manufacturer is for low volume and it's not Sony who offers the lowest prices

If you are talking BR, the it is pretty much Sony, and Sony, oh yeah, Sony. No one else is willing to get into the BR pressing market in a major way because of the CF that is BR licensing. So you are pretty much limited to Sony who has 95+% of the market and charges what they can which won't be cheap.

2. US mail for a single game is what 42 cents, and it's far cheaper to load a bunch of them in a truck to send it than an individual letter.

Unfortunately it doesn't work like that. Each store needs X number of copies. You cannot just bulk ship from the factory.

 

[-tkf-]

If you are talking BR, the it is pretty much Sony, and Sony, oh yeah, Sony. No one else is willing to get into the BR pressing market in a major way because of the CF that is BR licensing. So you are pretty much limited to Sony who has 95+% of the market and charges what they can which won't be cheap.

Unfortunately it doesn't work like that. Each store needs X number of copies. You cannot just bulk ship from the factory.

Uhh? Are you saying that Sony is the only one pressing Discs?

 

[aaronspink]

Uhh? Are you saying that Sony is the only one pressing Discs?

last report I saw, said pretty much that. Sony has 90+% of the market.

 

[Shifty Geezer]

Any idea how much money they get from that?

 

[AlphaWolf]

Any idea how much money they get from that?

Does anything but movies and ps3 games ship on blu-ray? It can't be a huge number or anything if the blu-ray market was only worth a few billion $.

 

[Silent_Buddha]

1. That manufacturer is for low volume and it's not Sony who offers the lowest prices
2. US mail for a single game is what 42 cents, and it's far cheaper to load a bunch of them in a truck to send it than an individual letter.

Your cost analysis saying it's far more than a buck is incorrect.

Sure, Sony has to ship it to distributors. Large retail stores can self distribute and cut some of the costs associated with going through dedicated distributors which smaller retailers cannot.

After the shipment passes customs (+ cost), it must then be unpackaged (+ cost) then repackaged (+ cost) for shipment to retail outlets (+ cost) where it must then be unpackaged (+ cost) and put out for display (+ cost). That also ignores any accounting, stocking, and any other associated costs (distribution fleet of vehicles, maintainence, fuel, etc.) in the whole distribution (shipping) chain.

Which as I mentioned, when you go through a dedicated distributor it's easy to itemize it. When you self distribute it's built in as a minimum profit margin that must be added onto all product to avoid losing money. Unless you happen to be in the product aquisition department of a retail chain it's unlikely you'll see this. Although individual retail outlet supply managers will get to see dedicated distributor costs for product which is higher than self distributed costs which includes the margin markup in the case of emergency restock situations.

As well the USPS isn't exactly a good example to use to counter shipping costs as the US Government subsidizes much of the shipping costs for shipping through the USPS.

Regards,
SB

 

[corduroygt]

Sure, Sony has to ship it to distributors. Large retail stores can self distribute and cut some of the costs associated with going through dedicated distributors which smaller retailers cannot.

After the shipment passes customs (+ cost), it must then be unpackaged (+ cost) then repackaged (+ cost) for shipment to retail outlets (+ cost) where it must then be unpackaged (+ cost) and put out for display (+ cost).

All those costs are built into the profit margin of the retailer. Without retailers, consumer awareness of a product would suffer. There's good reason, in this year where internet shopping is prevalent, that retail stores still exist and do good business.

 

[Silent_Buddha]

All those costs are built into the profit margin of the retailer. Without retailers, consumer awareness of a product would suffer. There's good reason, in this year where internet shopping is prevalent, that retail stores still exist and do good business.

That's fine, and it's what I already stated. But it most certainly makes the manufacturing/packaging/shipping costs far higher than 1 USD which was the original point in contention. Not whether the cost is hidden from the consumer. Hell the consumer doesn't know about the tons of taxes over and above Sales tax/VAT that is already built into their purchase.

Regards,
SB

 

[manux]

Nintendo endorses physical media over dd

http://www.eurogamer.net/articles/2011-02-18-nintendo-physical-media-is-here-to-stay

"We have been very clearly communicating for a long time that the packaged software or retail market is the one that's going to drive the mass market," Nintendo of Europe's MD of marketing and PR, Laurent Fischer told Edge.

"People who talk about the end of physical media don't share the same daily reality as most consumers," he said.

and sony is saying

Fischer's comments echo those from Sony Computer Entertainment boss Kaz Hirai, who in August last year insisted that a digital future is over 10 years away.

More on the link

 

[eastmen]

Yet sony has already said that all NGP games will be released on psn day and date and sometimes the digital verison will come out first

 

[manux]

Yet sony has already said that all NGP games will be released on psn day and date and sometimes the digital verison will come out first

If you had read the material on the link nintendo spokeperson made specific exemption for handhels and reasoned why handhelds cannot be used to predict home console market.

You shouldn't read it physical media only, you should read it physical media definitely and a DD only sku only as a possibility for certain markets.