High Replication Costs of Blu-Ray Slow down The Growth

High Replication Costs of Blu-Ray Slow down The Growth

It is undeniable for the increasingly impressive growth percentage of Blu-ray. However, it is a totally different picture when focusing on the numbers.

 

Double and even treble digit growth is comparatively easy to achieve when starting from a small number, however the total sales for Blu-ray titles is still a mere fraction of DVD sales. Putting aside the quality issues for a minute (and ignoring the fact the most people need some guidance to appreciate the differences in the two formats), lets look at the cost differences between the two formats for an independent film distributor or corporate marketing agency. Although the bulk of sales of DVD have been generated by major titles, the number of DVDs created by independent distributors cannot be overlooked. This important sector of the market is responsible for a significant portion of the DVD replication business in terms of revenue. Partly due to the increased margin on lower volume runs but also due to the sheer number of boutique labels selling specialist films and documentaries via the internet. In addition to this let’s not forget the countless marketing and promotional DVDs that provide valuable revenue to DVD replication plants. These two markets have grown to significant sizes due in part to the low costs of DVD replication (though the pervasiveness of the format is a significant factor too). A run of 1000 DVDs can now cost less than £500 to produce which for a label selling a DVD retail at around the £10 mark means significant profit. For a corporate marketing budget this figure is also very favourable, making a DVD replication run almost a disposable commodity.

 

Compare this to figures for Blu-ray replication. To begin with no Blu-ray replication run can be undertaken without the expensive addition of AACS copy protection. Yes and that includes any run that is intended as a give away marketing product. Arguably in these cases the content creators would like the disc to be copied and given away so the justification for this additional cost is tenuous at best. This copy protection is insisted on by IP owners of the Blu-ray format, and although is designed to protect the feature film content the format was intended for, it has had the unintended side effect of delaying the acceptance of the format. It is also an important factor that the AACS licensing is not straightforward and acts as an extra obstacle to be overcome.

 

Then we come to the cost of actually making the discs. The DVD replication plants that invested in the better value option of HD DVD soon had to replace these with the much more expensive equipment required for Blu-ray replication. None of this new Blu-ray replication equipment was compatible with existing DVD replication lines so plants effectively had to start from scratch with this investment. This has meant that in order to have any hope of recouping the sizeable investment, plants have had to make the unit costs very high and typical minimum run sizes are well above the equivalent DVD replication minimums – usually 3000 units or more.

 

Blu-ray needs to reach critical mass and become a commoditised format in the way that DVD has become for it to have any hope of edging out the format in time. It’s looking like the delays in getting everyone to agree on the HD format of the future has meant Blu-ray has had less time to get established before the next contenders come along. Holographic, solid state device, streamed – whatever the content and data storage industries can agree on as the next generation will be here too soon for Blu-ray.

 

Jonathan Moore is a consultant to the Blu-ray, CD and DVD industry.