Notes on Blu-Ray DVD Costs and Competition

Posted on by Larry

[ This article was first published in the Feb/March, 2008, issue of
Larry’s Final Cut Pro Newsletter. Click here to subscribe. ]


Blu-ray logoIn January, the battle between HD-DVD and Blu-Ray was finally decided in favor of Blu-Ray. We’ve been covering this in detail for the last couple of months on the BuZZ with regular reports from both Philip Hodgetts and Bruce Nazarian.

However, from the point of view of smaller producers, the best format may not have won. Well, more specifically, the least expensive format did not win.

I recently published a article on my website that’s relevant to this point, and then after that you’ll find an update.


In a recent conversation with Bruce Nazarian, president of the DVD Association, during The BuZZ podcast (www.digitalproductionbuzz.com), we were discussing the sudden shift toward Blu-Ray DVDs. While Blu-Ray may be good for Hollywood, it won’t be good for small independent producers. This is due to all the hidden fees tacked on to replicating a Blu-Ray DVD.

 

For example, producers of industrial and non-broadcast content are required to pay a $2,500 licensing fee to author and distribute Blu-Ray. [This is updated, see below.]

 

Then, each producer is required to pay a $3,000 one-time AACS license fee, plus a per-title fee for EACH replicated Blu-Ray disc. Currently, Sony DADC is quoting that fee at $1,585 per title (per complete Blu-ray disc project).

 

Then there’s the per disc replication cost, which varies by quantity, and finally, there’s a $0.04 per disc fee for AACS and $0.01 per disc if you want SONY DADC to administer the payments to AACS on your behalf.

 

As Bruce indicates, we may be standardizing on Blu-Ray, but the prices won’t be cheap.


That article sparked a lot of discussion, especially regarding licensing fees for Blu-Ray. I received several emails from readers pointing out that Blu-Ray has a lower-cost licensing program. So, I did some more homework and discovered that while that is true, it’s only a part of the story.

Here’s the update.

Several people have pointed out Blu-Ray’s logo licensing program (http://www.blu-raydisc.info/faq.php) has a reduced fee of either $3,000 or $500, paid annually.

 

However, Blu-Ray duplication or replication requires using AACS (http://www.aacsla.com/support/). So, while Blu-Ray costs can be reduced for small runs, AACS fees still apply.

 

Further complicating this issue is a recent research report (http://www.macworld.com/article/132232/2008/02/bluray.html) from Gartner and iSuppli which indicates that Blu-Ray may not be successful in the market place, because consumers may choose to download high-definition content from the web.

 

Additionally, recent conversations with Apple, covered in either the BuZZ or Edit Well, have indicated that Apple views digital downloads with much more interest than the creation of optical media.

So, while the format wars between HD-DVD and Blu-Ray are over, Blu-Ray is not yet priced attractively for the independent producer. As well, the entire issue may be moot if a viable financial mechanism appears that allows the independent producer to make money on downloads. For example, currently iTunes is more accessible for the larger studios, not in providing distribution opportunities for independents.

Depending how this plays out over the next year, Blu-Ray DVDs may yet become a non-issue.

UPDATE – March 6

Samantha Timmerman writes:

With all the coming changes in the business regarding Blu-Ray, etc, I’m convinced that it will, unfortunately, be very difficult for independent, documentary filmmakers to distribute and sell anything – as the costs are becomming prohibitive!

 

This proclivity of making everything licensable instead of buying something outright, is frankly, undermining the economy and creativity… but that’s another argument and as you often say, I digress…

Clay Coleman writes from the UK:

We had gotten all excited here and were planning on diving in, but now definetly have serious second thoughts. Our assumption was that Blu-Ray was basically an upgrade from DVD; better quality, a better delivery format, and at 50GB per disc very useful for archiving (P2, HDV, Masters backups, Project Files, misc. stuff), and at a cost of simply upgrading drives and players while assuming that the cost for blank discs would come down substantially over time.

 

I also think that for medium and smaller producers in the corporate and commercial area, the fees and administration work involved is a deal-breaker. For the same reasons, I can’t see clients (including the big guys) going for it either, certainly not at the cost levels you mention.

 

In the real world, it just doesn’t make sense. I’ve never paid an anual fee for owning a DigiBeta machine, or have charged a client 1500 bucks for delivering one DVD. And what constitutes “per complete Blu-ray disc project”? What happens with a re-edit of a previous job or a new language version? Are those new projects? And who is going to keep score? etc. etc. etc. Franz Kafka couldn’t have done better as far as creating an administrative nightmare is concerned.

 

Bottom line: IMHO Blu-ray, very unfortunately, is now a dead issue. They potentially had a good thing going, even won the war, but screwed up the peace.

Larry replies: Thanks for your comments.

 


Bookmark the permalink.

Leave a Reply

Your email address will not be published.

Larry Recommends:

FCPX Complete

NEW & Updated!

Edit smarter with Larry’s latest training, all available in our store.

Access over 1,900 on-demand video editing courses. Become a member of our Video Training Library today!

JOIN NOW

Subscribe to Larry's FREE weekly newsletter and save 10%
on your first purchase.