Mark Up Prices for DVD, inducing pirate?

[ryan]

Recently Media Asia has re-established their distribution system by distributing movies themselves. Operation Executive CHUNG Choy-see considers this would be more healthy to the industry. <br><br>In his interview with City Entertainment, he took 'Gen-X Cops' as an example. He said that the poster of 'Gen-X Cops' has emphasized that no means of entertainment (VCD/LD/DVD/VHS) will be released until 1st December. He hope this would attract audience watching the movie in theatres. <br><br>In addition, he also pointed out the policy of Media Asia in distribution. Media Asia will emphasize on quality and hence with higher price tag. For example, in the past the wholesale price for Media Asia DVDs are HK$ 150 each while selling price $ 198. This year, when they distribute 'The Fist of Fury', they marked up the wholesale price to HK$ 200 but it was still sold out in 4 days' time. <br><br>CHUNG announced that the price for 'Gen-X Cops' DVD will be HK$ 398. 'I hope we can make a new record (price). However, in case that we make a wrong calculation, we will reduce the price', he says. <br><br>Obviously, Media Asia is trying to probe price ceiling of the market in DVDs. Whatever what would be the price, in audience point of view, this may not be a good thing as audience has to pay more. <br><br>We don't know whether marking up DVDs at a high price will be successful, but this would induce to a potential problem -- Pirate DVDs. In fact, the problem pirate DVDs exist in Hong Kong for sometime but not serious. One of the main reasons is that the price of pirates is around $ 70 which is quite close to the legitimate ones ($ 70 - $ 160). <br><br>However, if the price for legitimates rises at a great difference with pirates, audience will tend to pirate market as they can get their substitutes at a lower price, provided that they do not take any care of the copyrights. <br><br>Relatively, cases from software has told us that Hong Kong audience tend to price competitive rather than concerning copyrights. This explains why bootleg software is so popular in Hong Kong. <br><br>In distribution companys' point of view, they would like to set up a high price with good sales. However, setting up a price at a crazy level will not help for its sales, but attracting audience to switch to bootleg market only. <br><br><br>

[sfong_1]

The point about pricing "original" DVDs high encourages piracy is quite legitimate. The value in buying an "original" DVD is found in the extras and quality of the image/sound. Many viewers who buy pirated DVDs aren't interested in the extras and aren't discerning about quality. They just want to see the movie for a cheap price. Hence the heads and audience conversations in many early DVD releases.

If you purchase an "original" and pirated DVD, then compare the discs you'll notice some significant differences. The original DVD usually has twice the number of bytes encoded on it 9GB instead of 4.7GB. If you are a discerning viewer and want to build a true DVD collection, then it would make sense to buy an "original," otherwise buy a disposable pirated DVD. In older movies there are often no extras and the quality of the images/soundtrack do not require the additional bytes, but for the latest movies "original" DVD is the way to go to get the full theater effect.

Should the movie studios want to get serious about dealing with piracy of their intellectual property they will need to get more serious than just having government agencies ineffectively policing sw and DVD pirateers. Maybe the best way for them to combat piracy is to manufacture DVDs at different quality levels and corresponding prices. For example, those without extras and use lower quality (4.7GB) DVD discs priced at almost pirate prices. Their problem is that it can be a logisitic nightmare to manage inventory.

In China (the mainland) piracy is rampant. Even government agencies use pirated software and use pirated DVD training material. Shops selling pirated sw/dvds/cds are everywhere and operate openly. To stay in business they pay "fees" to local law enforcement agencies. Maybe this will change as China ascends to the WTO, but I suspect not. It's normal business in China.

Many multinational firms recognize this issue, and as a result don't introduce any advanced technology into China, knowing it will likely migrate outside the company.

[Brian Thibodeau]

Good to see someone besides myself still keeps an eye on the old articles posted here.

As to this whole piracy debacle, I believe the cost of legit HK DVDs has dropped considerably since 1999 when Ryan first posted his complaint. Media Asia in particular were notoriously overpriced in their pricing strategy, with discs fetching upwards of $34.95 to $49.99 Canadian once they reached overseas retail (like here in Canada), while contemporary American releases were already dropping to the $25-$30 range.

I recently posted a rant regarding the piracy issue in response to an article I’d read which detailed the only avenue of retort seemingly left open to the frutstrated members of the Hong Kong film industry like Jackie Chan: smashing fake displays of fake purses to make some kind of feeble “point.”
http://hkmdb.com/phpbb/viewtopic.php?t=41877

If you purchase an “original” and pirated DVD, then compare the discs you’ll notice some significant differences. The original DVD usually has twice the number of bytes encoded on it 9GB instead of 4.7GB. If you are a discerning viewer and want to build a true DVD collection, then it would make sense to buy an “original,” otherwise buy a disposable pirated DVD.

A few years ago, I’d have agreed wholeheartedly with this statement, as indeed many pirate DVDs were of an inferior quality, but now I realize that any one person’s experience in this area is entirely based on the country in which they live. As I mentioned in the post linked above, pirate DVDs in China, Hong Kong and Canada, and probably several other countries, are virtually indistinguishable from the originals. By that I mean these discs are PROFESSIONALLY MASTERED using original digital components as well as original sleeve artwork modified to include Chinese lettering and printed on heat-set glossy stock (I work in the printing field and I know quality when I see it). These are not the standard shot-off-a-movie-screen and ripped-on-a-home-computer DVD-Rs or DVD+Rs with crummy little color xerox sleeves; these are fully featured, silver-single-layer or gold-dual-layered discs that mimic the legit versions to a tee. Almost as if to flip the bird to the studios, the pirates are often able to add the ORIGINAL CD SOUNDTRACK onto the DVD as a "hidden" feature, which of course, means even better value for those so inclined.

These DVDs are most likely duplicated using leaked “source materials.” Considering just how many of the world’s DVDs are now manufactured in China, it’s not too much of a stretch to picture some after-hours bootlegging going on, whether it’s in the form of DVD pressing machines stamping out a few extra thousand copies under the radar, or some sneaky dude in the marketing department emailing the sleeve art to a site off the premises, or an underpaid techie making sure his computer is “accessible” to someone who could then download the digital mastering components (the film, soundtracks, extra features, etc.). The American boots are really a sight to see: DTS, anamorphic widescreen, dual-layered DVD-9's, commentaries, extras, multiple soundtracks (including the contents of the official soundtrack CD), glossy printed sleeves and usually a cardboard slip case to protect the disc and eliminate the need for bulky amaray cases to take up space in invariably tiny stores. It's scary when the bootleggers are more progressive-minded than the varous studios they're ripping off.

Don't get me wrong, many of the boots, particularly those of Hong Kong pictures made from basic, low-priced single layer originals, are indeed ripped to DVD-Rs to keep the prices ridiculously low, and the sleeves are indeed your average-quality color photocopy. Even then, I'd imagine the margin on these titles, once the pirates factor in the cost of replication, sleeve copying, and an amaray case, is pretty slim when the discs are selling for a paltry $4 a piece (less if you buy in bulk). Volume sales is where they make their money.

And while this problem may seem like one that only affects a handful of countries with lax or poorly worded copyright laws, you can rest assured that the money the pirates are making right now will allow them to move into trickier markets with ease, once the quality of their work is sampled by more and more people through such services as eBay, which is so rife now with bootleg product as to be a veritable haven black marketeers.

This is all going to get a lot worse for film industries the world over before it gets better. The MPAA and Jackie Chan and marketing people can stage all the protests they want and throw all the media-savvy tantrums they see fit, and the world's law enforcement agencies can stage raid after raid, but it'll be a long time before they can cut all the legs of this spider, especially when new "legs" grow back virtually overnight.

Perhaps the answer lies in adopting a better pricing strategy, as both "sfong 1" and Ryan have mentioned above, but the prices would have to be A LOT lower to successfully drive an expanding bootleg customer base away from pirate goods and back to the legitimate product. But even that is a longshot, since pirate discs here in Canada's Chinese communities now sell for a jawdropping 3/$20 CDN for high-quality American boots, and 5/$20 for Asian boots (Hong Kong, Japanese, Thai). As I mention in the post linked above, a recent high-profile bust of the bootleg industry in Toronto had exactly the opposite effect to the one intended. The customer base in these stores grew so fast and so quickly that MORE stores were opened to handle the flow, and a least one store in a popular Chinese Mall went so far as to hire a CAUCASIAN guy to work the counter so the Chinese store manager wouldn't have to answer so many questions from the influx of gweilos who instantly became regular customers.

I remember years ago, the shining lights of the Hong Kong film industry staging a solidarity March against the organized crime that had long infested their industry (the same organized crime that had made the industry so successful for a good two decades, somewhat ironically). Jackie Chan led the parade. While I'm certain the film people thought they were striking a crippling blow to the underworld leeches who had so long plagued their existence, the truth and the consequences were much uglier: the spectre of dwindling profits in theatrical production and distribution after the 1997 handover, and the burgeoning era of digital media, gave the criminal element a whole new lease on life, and with the later addition of pirated AMERICAN DVDs to their repertoire, a viable and, so far, long-lived source of revenue, and a buttress against the potential death of the Hong Kong film industry, where well-meaning folks like Jackie Chan still think that public service announcements and press-friendly PR "events" will actually make a difference.

They won't.

Something bigger has to take place, maybe something more convergent. Perhaps the film and DVD industries will one day take their cue, or even steal strategies, from the DVD pirates and fight them at street level, the way the music industry was forced to several years ago, as they watched CD sales plummet in the wake of the rise in popularity of on-line swapping. Sure they never stamped out illegal downloads, and in fact the practise has, if anything, grown since then, but at least they figured out a reasonable compromise that allowed them to get a slice of the pie for as little as 99¢ a song. The format would need tweaking for movies and TV shows, but seems inevitable as the only viable option with which media titans can compete, in this case, with deeply rooted organized crime.

If you can't beat 'em....

[magic-8]

Pirates will always be around if there are people who will buy them. I will not support boots, and my DVD collection is a testament to that. People just don't get it. If you buy a boot, you don't support future productions because the money goes into a bootleggers hands and not the producers or studios. Education to the general public has to be more specific and to the point. The music industry shot themselves in the foot because they would not lower prices and ended up raising them. The fools.

[Brian Thibodeau]

Pirates will always be around if there are people who will buy them

This is exactly the problem here in Canada's big cities right now, and, as I mentioned here and in another rant over in the Hong Kong movies section, the law enforcement authorities only AIDED the situation by making their recent raid in Toronto public knowledge mere hours after it was pulled off, ignorantly letting everyone who watched the news that night know just where they needed to go once the heat died down.

I was in Toronto just last weekend (July 1-4) and noticed the problem is even worse than I previously reported. In downtown Chinatown, young guys are selling bootlegs on TABLES out in front of stores along the street! If one thought the dealers were brazen in prominently displaying American and euro boots in their stores after the big bust, THIS really takes the cake. These kids don't have the selection of the stores, but they were clearly making a nice little profit from these tables. I counted about five set-ups like this in a two block stretch, but there could've been more. The sleeves were Kinko's quality color copier crap, and the discs were most likely DVD-Rs, but there were the usual throngs of Asians and Gweilos snapping up copies of Mr. and Mrs. Smith, Madagascar, Star Wars Revenge of the s**t, Batman Begin (sic) and various other movies still playing in the theatres. I overheard one kid telling a customer that these discs were about 75% as good as the "normal" discs you see in the shops, which pretty much cemented the sale. The copy of Batman Begin playing on his little tabletop TV confirmed this, while also proving that not only will people support this industry, but they really don't care about the quality so long as they can enjoy the novelty of telling their pals they're watching a movie at home while it's still playing in theatres.

A co-worker of mine just returned from a weeklong trip to visit a friend who's teaching in China, and she brought back a stack of bootleg movies, identical to the ones in Toronto in every way except for price. She bought hers at a street vendor in Beijing for the unbelievable low price of about 10 for $7.00 US. One wonders how even street-level sellers or their (no doubt) triad-affiliated suppliers can profit from such drastic price-slashing. And then one realizes how much profit these same people are making in Chinatowns the world over, where the same discs sell 3 for $20.

Once again, I have to give the Hong Kong legit DVD industry props over the American one in that, if nothing else, they've responded to the piracy menace with the only option left open to them (apart from Jackie Chan punching out CD jewelcases in public): they've lowered the prices. In the early days of DVD, Hong Kong cinema, and not entirely due to it's import status, was astronomically more expensive than domestic movies on disc. But new release prices dropped considerably in a very short period of time (not long after the boots started popping up), and further price-drops are some of the most rapid I've seen in any market, with tonnes of stuff hitting the $3-$6 US price point in a matter of a few months, unlike in the States and Europe, where one has to wait a more than a year or three before certain lesser titles reach the $5.50 US Walmart Dump Bins, and even then you have to squeeze in between seven shades of trailer trash just to see what's up for grabs.

This all reminds me of an interesting conversation my girlfriend Angie had with one of her Chinese medical colleagues during another recent visit to Toronto (at a dinner at which I was not present). She'd noticed a couple of Optical stores in the nearby Chinese mall were offering free eye exams, which is a no-no here in Ontario unless it's performed by ophthamologists or optometrists. Both Angie and her friend are optometrists (a six- to seven-year degree) and the practise of unlicenced opticians (a two-year diploma program) performing free eye exams is medically risky and, from a financial standpoint, detrimental to the bottom line of the trained professionals.

Sharing her frustration with her friend, Angie asked her what she though about the situation, to which she replied, "I don't like it, but what can I do. This is Chinatown. People do whatever they want."

I will agree that education about these matters, if it was to be effective at all, must be more specific than it has been, but if you could see how pervasive this practise is becoming in Canada, and therefore several other countries around the world, you'd be hard pressed to want to even try to convince these ignorant suburbanite "bargain-hunters" of the damage they're doing. It really is that big.

At least the music industry created a comfortable, viable, and immensely profitable alternative to illegal music file-sharing and overpriced CDs in the form of iTunes and the retooled Napster and the like. Of course, people still share music files for free, but I've heard the numbers have, in fact, declined over the years because the legal download sites offer much more reliable quality and at arond a dollar a song, the world hasn't heard much complaining just yet.

Next up will be movies, I'm sure. I'm keen to see what happens with this new "Clickstar" service being shopped around by actor Morgan Freeman and his business partners. Supposedly, they recently received a major cash infusion from Intel. The service reportedly will allow people to download DVD quality movies either briefly before or day-and-date with regular DVD releases. If the price is right, say around the price bootleggers now charge for the same top quality product (about $6 a movie, or the cost of a rental from Blockbuster), only then can I see the bootlegger customer base eroding somewhat. As things stand right now, I really don't see any other options working. Not police intervention, not taxpayer-funded education, not even the abstinance of the majority.

Considering how prevalent the online swapping of TV shows and movies is at the moment (it really is almost like the old music swappers grew bored with such small potatoes as SONGS), as well as the generally rotten quality of such material when it's yet to appear on legit DVD, a service like Clickstar stands to at least maintain a much-needed level of quality control. I guess the price will be the deciding factor if a service like this - probably the only hope left in the fight against widespread piracy, even if it can't possibly wipe out the practise - is to change the way we purchase our movies.

Just some thoughts...