Sunday, April 23, 2006

Piracy in China changes Hollywood's pricing model

It turns out that Warner Home Video is convinced that it can sell new-ish releases (such as The Aviator) in China at $1.50 and still make a profit. $1.50, for what it is worth, is about the average price point for movies out here in Beijing if you go to a store to buy it, but the vast majority of these DVDs are pirated copies. On the streets, you can get away with paying much less, but the percentage of poor-quality DVDs is much higher on the street, as there is no accountability on the part of the seller.

While it is probable that some of the markup for which Americans pay when buying movies comes from the increased cost of labor in the US (or the cost of shipping product from countries with cheaper labor, like China), some of it also comes from all the packaging and advertising in the States. Here in China, most movies are sold in simple plastic slipcovers with a cardboard insert containing all the relevant box art, with the DVD tucked into a tiny protective baggie or envelope. And, although American production houses invest millions in TV advertising and movie trailers, movies are not really advertised here in Beijing. At $1.50, they don't need to be. The average person can easily afford to buy a movie on the merits of the cast/director/box art alone.

Anyhow, for those who are interested in reading MSNBC's coverage of this story, click here.

2 comments:

Anonymous said...

What about Chinese subtitles? CSS

Lance Shuey said...

I think the US pricing is set at what producers feel the market will bear. Charge too little and there's no implied value. Charge too much and people won't buy them. So they charge what they do because they can.