Nov 7, 2007

Three dollar LEGAL dvds in China

Arstechnica has a simple but fascinating article about Paramount selling $3 dvds I want to pick a few bits out of and comment on.

1. "It comes down to our ability as marketers to convince the Chinese consumer it's worth spending the money."

-Fox's international home-entertainment manager Keith Feldman defending his company's $3 dvd price point in China, which is double the illegal street price. (November, 2006)
Is this true? It's the marketer's ability that will determine what consumers will spend and whether they will buy illegal dvds or not? Aren't there other forces at work?

(A) the level of punishment for the crime

(B) consumers' opinion on the subject

(C) the price of the legal dvd

(D) the other ways to get the content that is on the dvd
2. New movie titles will go on sale some two months after their theater debut in the US, and for only $3.
Three points:

(A) Who determined the price of their dvds? Not their marketers, not their CEO, but the criminals and the consumers who buy from them: eople having nothing to do with their company.

(B) They hope consumers in China will pay double the street price for a dvd because it's a legal version of the dvd. This may prove successful, but ultimately, they've devalued their product in the eye of the consumer. They're saying "Our product is actually worth double what you can get it on the street for, which isn't very much."

(C) Luxury handbags are copied and sold dirt cheap by criminals and bought by consumers, much like dvds. Yet, why don't luxury brands cut their prices down to meet those found on the street? They instead battle the criminals directly:
“Fabio Silva, intellectual property counsel for Burberry in the United States said Burberry has an in-house team working with local law enforcement throughout the world, including Canal Street, to interrupt counterfeiting operations. Burberry works with other brands, such as luxury goods conglomerate LVMH (Mo√ęt Hennessy Louis Vuitton), Gucci and Dior to initiate enforcement. Raids usually result in the arrest of manufacturers, wholesalers and retailers, many of whom go to prison and pay fines and damages. “Burberry always pushes for the maximum penalty against trademark thieves,” Silva said.'" (Source)
(D) The article admits the media companies won't make a lot by doing this (obviously).

So why do it?

I don't know.

1 comment:

Anonymous said...

Well, one thing that you might be overlooking here is that $3 US is considerably more money in China - 20something yuan right now.
Another is that spending lot of money on entertainment is a luxury we have in this country, and the luxury of the entertainment market to charge astronomically high markups on that entertainment depends on that. But discs are very cheap to manufacture - in my opinion, a lot of the money ought to be going to the creatives behind the art itself, not the studios and distributors. If the studios are choosing to take a fall in order for themselves (and the artists) to get a little of the money due to them for the movies, instead of all the money going to pirates... shouldn't that be a legitimate choice?

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