Disney renting self destructing DVD's

[CWIPPERMAN]

Just to add another thought to this. These discs would have to be DIRT CHEAP to make it worth while to buy them. I can tell you that for most of my life, I have been a 1 movie (in a theater) per week person. I am also someone that used to rent 3 or 4 movies/week from Blockbuster. Since I bought my DVD Player 3 years ago..... I doubt I have been to a movie theater more than 3 times, and the only thing I rent from Blockbuster is games for my Playstation 2.

Here's the way I figure it...
Movie Tickets - 2 Adults - $16.00
Concessions - 2 Adults - $14.00
Gas To Theater - $2.00

Total - $32.00 (plus the time it takes to drive to the theater - find a parking space - stand in line for tickets and concessions - get out of the parking lot after the movie).


OR......

Wait 3 months and buy the DVD of the movie for $19.95, and get 6 hours of bonus material - and watch it whenever you want.

So......
If I can buy a movie for $19.95 (or less in some cases)... I can tell you right now that I wouldn't pay more than $3.00 to "Rent" one of these movies - when I could buy the thing and have unlimited access to it forever.

If they're thinking of selling these for anything over $4 or $5 - then I think this whole deal will be about as popular as the VideoDisc Craze.

 

[emmagata]

Originally posted by CWIPPERMAN



OR......

Wait 3 months and buy the DVD of the movie for $19.95, and get 6 hours of bonus material - and watch it whenever you want.

So......
If I can buy a movie for $19.95 (or less in some cases)... I can tell you right now that I wouldn't pay more than $3.00 to "Rent" one of these movies - when I could buy the thing and have unlimited access to it forever.

If they're thinking of selling these for anything over $4 or $5 - then I think this whole deal will be about as popular as the VideoDisc Craze.

Why would you spend $20 on a DVD unless you plan to watch it more than several times ($3 BB or self destruct rental)? I would only buy the ones that are special editions or where I know I"ll watch it more times than the purchase price divided by the rental price.


Or....

You could rent a self destructing DVD and copy it onto a DVD+(or-)RW for about 6 bucks. That assuming a $3 blank l (they're getting cheaper all the time) and a $3 rental. The reason in using a DVD RW is in case you never want to watch the movie again. You can reuse the DVD RW.

One advantage of the (hopefully cheap) selfdestructing DVD is that is won't be scratched up like some Blockbuster DVDs that I've rented.

I wonder what kind of case they'll come in?

 

[JoNo]

OK, here's my take... It all started with the burning of music onto CD. this was SUCH A HUGE ISSUE! ....BUT!.... Does anyone remember *whispering* before cd's made it big, what'd we do? We copied tapes by having a double tape deck, popping in a blank tape, hitting record, & voila! instant copy... OK NOW, this will not catch on...

1) any smart person can ALREADY copy a dvd onto cd (I will admit, i'm guilty.... but I just LOVE Fraggle Rock!)

2) I can guarantee the process into which it takes to make these DVD's will cause them not to be made. Look at it... say each of these self-killing DVD's go for 50 cents a piece. Now, current dvd's go for only about 5 cents. let's do the math. for one of those new DVD's, it will cost as much as 10 regular dvd's. in the longrun, you're looking at a BIG chunk of change plus higher rentals & such... ok let me get off my soap box now.

 

[KNWVIKING]

Copying tapes was never a big deal because the copy was never as good as the original plus by their very design the sound quality on both original and copy degraded with each play. CD copies are exact digital reproductions that will always sound the same.

Where are you getting your 10x cost figure ? The chemical treatment probably cost less then the actual plastic material.

DVD's are also going to get harder to copy because of various encryptions. I realize they will never prevent my son from copying a DVD, but they can pretty easily prevent me from doing so. And for the time being at least this world has many more "me's" in it then "son's".

IMO the program will pass or fail based on cost. I know what my local Blockbuster rents for and returning them is no big deal. If Disney can beat their price, then I'll probably take advantage. One of the problems I'll run into occasionally is I'll rent a weekends supply of movies to get a discount price. Then have things pop up over the weekend then come Monday morning realize I haven't watched all the flicks. With the throwaway system I just save them till whenever.

 

[Experiment626]

What if I just don't finish the movie in two nights?

The disk would be sealed to keep the oxygen out, so the clock starts ticking when you open the package, not buy it in the store.

Eisner is just SO concerned about losing $ over people burning CD's.

While I'm sure that is part of it, the real target they are going after is the video rental market. If given the option of buying a $4 48-hr disk at the grocery store or at wal-mart over making a seperate trip to blockbuster and having to return the disc at the end (or risk late fees) which would you do?

More importantly, if you cut out blockbuster and "rent" them yourselves to consumers its money that goes to disney and not to the rental stores.

I can see it now... 48-hr viewable DVDs of Snow White and Lilo&Stitch sitting next to the candy at the grocery store check out.

 

[JoNo]

Originally posted by Experiment626

More importantly, if you cut out blockbuster and "rent" them yourselves to consumers its money that goes to disney and not to the rental stores

My Fiance works at a movie store and let me tell you something... (not to flame you) The rentals they purchase to let people rent them are NOT cheap... an average Disney VHS costs about $300, DVD $400 which DOES go straight to Disney...

 

[emmagata]

Originally posted by JoNo
My Fiance works at a movie store and let me tell you something... (not to flame you) The rentals they purchase to let people rent them are NOT cheap... an average Disney VHS costs about $300, DVD $400 which DOES go straight to Disney...

Those figures don't make sense.

Say BB has 50 copies of a new release DVD on the shelf and they paid $400 EACH, that's $20000 in direct costs. They rent them for about $3.50. They'd have to rent those DVDs 50 DVDs over 5700 times just to break even.

Say Disney "rents" the self destructing DVDs for $3.50 (for easy math). They'd have to "rent" a little over 5700 copies of that DVD just to match the dollars they got from the 50 DVDs they sold BB.

That plan sounds like a loser right from the get go (assuming a $400 cost for a DVD to a rental store).

 

[KNWVIKING]

I have no clue what the BB fee per movie is, but I would assume that even if Disney goes ahead with their destructo plan they would still offer the vids thru normal rental outlets.

 

[JoNo]

I know it doesn't make sense to charge that much, but it's how much they have to pay... I've seen the catalogs. Of course, Disney costs the most, universal movies only cost about $200 to buy.

 

[All Aboard]

Actually, those numbers do sort of make sense. At a cost of $350, each dvd would have to be rented 10 times in order to break even. I think that's plausable. So, Blockbuster then needs to guage demand in order to set its inventory. If they underestimate, they don't maximize revenue; if they overestimate, they can lose money on the title.

Learn something every day. I always assumed that the film companies got paid a royalty each time a movie was rented - simliar to the way the music industry works (and for that matter films in the movie theater.)

 

[Cricket2]

Originally posted by JoNo
an average Disney VHS costs about $300, DVD $400 which DOES go straight to Disney...

I know a regional distributor for "Rentrack" and the average cost for an unlimited license VHS (non-program media) is $42-$68. New or old is not relevant, they are all the same to the wholesaler (he did say that Disney is one of the, if not the most expensive ones).

A program media tape will be anywhere from free to around $9, but it is limited in length of time in the store. It's sort of a pay-per-rent for the stores.

Blockbuster IS a distributor, so they pay wholesale for the media and a licensing fee (basically free). The sales are tracked and the movie house distributors get paid a % per rental.

DVDs cost less, not more than VHS, and also make less money.

I can ask him other questions if anyone has any simple ones.

JC

 

[emmagata]

Originally posted by gcurling
Actually, those numbers do sort of make sense. At a cost of $350, each dvd would have to be rented 10 times in order to break even. I think that's plausable. So, Blockbuster then needs to guage demand in order to set its inventory. If they underestimate, they don't maximize revenue; if they overestimate, they can lose money on the title.

Learn something every day. I always assumed that the film companies got paid a royalty each time a movie was rented - simliar to the way the music industry works (and for that matter films in the movie theater.)

Your calculator is broken.

At $350 each and a $3.50 rental, each DVD would have to be rented 100 times just to break even.

Given that BB can have as many as 100 new releases, that adds up to a lot of rentals needed at $3.50 a rental and $350/DVD just to break even. Even if the cheaper DVDs are $200 each it still a lot of rentals need by EACH DVD to break even.

 

[d-r]

Here is my take on this.

Before 1998 or 1999, most everyone had vcrs. Back then, most people rented the tapes. Most people bought only FAVORITE movies, or things they wanted to collect. Most of the highest selling tapes were children/family movies. Parents bought them so that their kids could watch them whenever.

Along came dvd. I can remember when there was only one little shelf of dvds in blockbuster. Now there are copies of every movie integrated beside the tapes. Last Christmas DVD players were cheap. I have to think that after this coming Christmas most every home that watches TV will have a dvd player.

But the buying habits have subtly changed. Multiple disc sets with lots of special features were put out, and this caused people to want to buy more dvds, rather than simply rent them or wait for hbo. Now there were all these extras, so DVD sales went up.

But I think that Disney thinks that these extras aren't so important for children/family dvd sales. After all, those were the highest when everyone was selling crappy bare bones vcr tapes, right? People just want these for the kids, right? Why pay extra for all these special features when people just want to get a cartoon that will keep their kids busy for an hour or so. Remember how slow Disney was to get into dvds in the first place, and how crappy that first set of "limited editions" were. Think about the one-disc only recent releases.

Take that thinking and extend it. Make throwaway dvds that are so cheap that they can hang out in the aisles at target and walmart, and that parents can just buy them for their kids for impulse. Heck, they will probably end up buying the same one again, eventually, maybe even buy the regular dvd of it. But there will be a lot of that impulse, just get the kids something, or hey, honey, grab one of those disney films for sally to watch while we are making dinner, or if you are good we'll get finding nemo to watch tonight, sort of purchases. No worry about extra features, packaging, quality, etc. Heck it is a throwaway.

DR

 

[wtg2000]

Actually, those numbers do sort of make sense. At a cost of $350, each dvd would have to be rented 10 times in order to break even.

That would be 100 times go break even.

I admit I don't have any inside information, but the idea that Blockbuster pays Disney $400 for one DVD is insane and defies economics.

For example, let's assume that Harry Potter charges the same. Up here in Canada that would be $600. They charge $5 to rent so they have to rent it 120 times just to break even. The last Harry came out about one month ago. You can keep it for two nights so they've been able to rent each copy say 20-25 times (high estimate). That's $100-125 income on each. They already have switched those copies to weekly rental, which means in the next year they could rent it out possibly only 50 times. That's $250 in income. They are still $250-225 in debt just to break even. Other copies have gone to the "previously scratched," excuse me, "previously enjoyed" for about $25.

That means on these they are losing $475-450 per copy. How can Blockbuster afford to do this and still stay in business?

 

[Experiment626]

Note that disney and blockbuster haven't been getting along as of late... Disney sued BB for breach of contract:

http://www.latimes.com/business/la-fi-disney3jan03,0,3323910.story?coll=la-headlines-business

From the same article they say:

The lawsuit stems from revenue-sharing deals that Blockbuster cut with studios in the mid-1990s. Before revenue sharing, Blockbuster bought tapes for more than $60 and kept all of the rental money. Blockbuster then forged agreements to buy videos from the studios at discounted rates.

So at $60 the break even point is reached with about a dozen rentals. Now, there isn't a break-even point and disney gets a % of the rental income.

Fool.com has some interesting things to say on the subject (http://www.fool.com/news/commentary/2003/commentary030519ram.htm) including the idea that McD's could be used as a possible distribution location.

 

[wtg2000]

Studios are offering the lower-cost discs to rental stores and mass merchandisers at cheap rates, hoping to stimulate direct sales to consumers.

Quote from the article. Thus, I doubt that they are paying more for the DVDs that they rent then they are for the ones that they sell. So that's a lot less than $400 per copy.

 

[JoNo]

Well, here it is: the official release: HERE

 

[Another Voice]

Avoiding the economics of the dying movie rental business (they change everyday and each studio is basically cutting its own deal with the big chains), there is one key marketing element that no one seems to have mentioned yet.

Kids like to watch movies over and over and over and over and over and over and over and over and over and over and over and over and over again.

That's why children's movies are such a huge percentage of sales as opposed to rentals, why direct-to-video productions first really took off in this market and why rental stores stock a fewer copies of kid's movies compared to the big Hollywood blockbuster – people want to have these films available to watch whenever they want to and the means buy rather than rent. Every night in probably half the homes in America you can hear someone say "Mommie's busy right now, why don't you watch your tape".

So – what's the point of buying a children's movie (the segment Disney is most heavily weighted towards) if it's not going to serve the basic need of being there when your kid wants it? What parent wants to deal with a four year old when his DVD of Bear in the Big Blue House explodes and he can't see it anymore? As a consumer, which is a better value – a $20 movie that you child will watch a zillion times over the next two years, or a $5 movie your child will watch twice over the next two days (and then throw a tantrum until you to go back to the store and buy another)?

This is yet another Disney Concept that is driven by greed rather than common sense. I give this one a shorter life than DIVx. Even the unopened discs will last less than a year so you can't move all the unsold product off to Costco; poor sales and a perishable product always means really bad economics.

 

[Experiment626]

Originally posted by Another Voice
people want to have these films available to watch whenever they want to and the means buy rather than rent.

what if they offered new releases only in the flexplay format?