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Author Topic: Studio "take" of DVD sales/rentals Lyle Romer Phenomenal Film Handler Posts: 1400 From: Davie, FL, USA Registered: May 2002 posted 01-03-2006 10:02 PM                     What percentage of a DVD sale or rental do the studios get? Or, is it a fixed amount per unit? It is strange to see all these super discounted DVD's (Wedding Crashers at $15 from target) on successful films.  |  IP: Logged Mike Heenan Phenomenal Film Handler Posts: 1896 From: Scottsdale, AZ, USA Registered: Mar 2000 posted 01-03-2006 10:05 PM                     That seems about right for a new release DVD... but there's some real bargains to be had on good titles, like I saw T2 Ultimate Edition for 5 bucks at target once, crazy. I guess when they overpress them, they lower the price to move them out.  |  IP: Logged Mike Blakesley Film God Posts: 12767 From: Forsyth, Montana Registered: Jun 99 posted 01-04-2006 02:35 AM                        At my store we sell the occasional DVD. The dealer cost on a typical $20-range title is around $14. The warehouse we buy from probably gets the disk from distribution for around $11 or $12. I have always thought the studios should find some way to get some of the vast rental $$ that one DVD can generate for a store. At $3 a night, if a movie rents 20 times the store has made over $40 profit on a $14 purchase. Too bad we theatres can't make that kind of a percentage.  |  IP: Logged Claude S. Ayakawa Film God Posts: 2738 From: Waipahu, Hawaii, USA Registered: Aug 2002 posted 01-04-2006 04:59 AM                        As I had mentioned in the thread regarding the King Kong movie credit at the Film Handlers Forum, I either rent or buy a lot of DVDs instead of watching the films in theatres. Yes, I am also amazed at the low prices one can purchase these little discs. When I used to buy laserdiscs, the least expensive titles used to sell for no less than $29.95. Most were selling for either $34.95 or $39.95. Many special editions were going for as high as $250.00 (STAR WARS) I think Tower Video in my area was the only one discounting them as Red Tag specials for about $15.00 but the selections were very limited and they did not have these sales very often. It is not unusual to buy a popular titles on DVD the day they are released for as low as $14.95 at either Wal Mart or Circuit City. Although Best Buy will match these prices, they usually will offer their DVDs for about $17.95, the same as Costco and Sam's Club. I have recently bought a movie on DVD for the super low price of $14.95 only to learn as recent as last Sunday that this same disc can now be bought for as low as $7.95. DVDs are a bargain and that is why I love them instead of high movie theatre admission prices despite the fact that I qualify for senior citizen admission at $5.75. Come to think of it, I also have a senior citizen video rental card at Tower Video where I can rent new DVDs, for $1.75 on Sunday, Monday, Tuesday, Friday, saturday and $1.25 on Wednesday and Thursday. -Claude  |  IP: Logged Lyle Romer Phenomenal Film Handler Posts: 1400 From: Davie, FL, USA Registered: May 2002 posted 01-04-2006 08:43 AM                     quote: Mike Blakesley I have always thought the studios should find some way to get some of the vast rental $$ that one DVD can generate for a store. Depending on the agreement with the rental store, they do. I know that if a video store buys a "rental copy", it costs a lot more than a "for sale" copy. I am remembering something in the $50 range. I remember blockbuster a few years ago negotiated a revenue share on each rental instead of a flat fee per copy. This is how they were able to start the guaranteed to be there thing because they couln't buy that many copies at the previous price and still turn a profit because the demand was only there for the first week or two (hmm.....sounds familiar). I don't remember what the per renal share was that the studios get, hence part of the reason for this thread. Mike, thanks for the info on the sale side of my question!  |  IP: Logged Sam Graham AKA: "The Evil Sam Graham". Wackiness ensues. Posts: 1431 From: Waukee, IA Registered: Dec 2004 posted 01-04-2006 12:43 PM                        quote: Lyle Romer Depending on the agreement with the rental store, they do. I know that if a video store buys a "rental copy", it costs a lot more than a "for sale" copy. I am remembering something in the $50 range. Is that still the case? I know it was in the VHS days when studios released titles specific to the rental market for a few months (at a suggested retail of $100 per title or so), then they dropped the price for retail sales. I was under the impression that "priced to rent" went away with the DVD market and that rental stores were paying the same distributor price a store selling copies would (the aforementioned $11-$12), or had revenue sharing agreements such as the one Blockbuster does.  |  IP: Logged Lyle Romer Phenomenal Film Handler Posts: 1400 From: Davie, FL, USA Registered: May 2002 posted 01-04-2006 01:26 PM                     I'm 90% sure that rental copies still cost more. If blockbuster could just buy a copy for $11 or $12 bucks and then sell it for $5 used at when they're done with it, it would only take 2 rentals to turn a profit on a disc. Why on earth would they revenue share if that's all it would cost them. Assuming the revenue share is 50%, 4 rentals with revenue share would net them about $10, 4 rentals if they bought the disc ($7 cost after selling the used disc) would net them $13.  |  IP: Logged Mike Blakesley Film God Posts: 12767 From: Forsyth, Montana Registered: Jun 99 posted 01-04-2006 06:55 PM                        Well I don't know about the Blockbusters, but I do know the local video store here. The owner goes to Wal Mart and Costco, buys the DVDs cheap and rents them forever without paying another nickel. I would think the chains have an even better deal -- they can buy the disks in box lots and pay even less than Costco does.  |  IP: Logged Lyle Romer Phenomenal Film Handler Posts: 1400 From: Davie, FL, USA Registered: May 2002 posted 01-04-2006 10:07 PM                     I would assume that what he is doing qualifies as "unauthorized distribution" of the material as warned against in the FBI warnings. I won't tell the studios if you don't.  |  IP: Logged David Stambaugh Film God Posts: 4021 From: Eugene, Oregon Registered: Jan 2002 posted 01-04-2006 10:26 PM                        Hmm. I'm looking at a Warner Home Video DVD that says in the fine print "For sale or rental in the US and Canada only." A Columbia release only mentions sale, not rental, but it does say "any other use [besides sale] is prohibited".  |  IP: Logged Tao Yue Expert Film Handler Posts: 209 From: Princeton, NJ Registered: Apr 2001 posted 01-18-2006 08:34 PM                        It is perfectly legal to rent out a DVD that has been legally purchased, no matter from which source and at what price. This is the "first sale" principle, found in the Copyright Act -- 17 USC, section 109. See, e.g. http://en.wikipedia.org/wiki/First-sale_doctrine Some people are confused by the fact that VHS does have rental-only pricing. However, the catch is that this is enforced solely through release windows, where the store essentially pays a premium to buy the tape before it is available in general release. Supposing they need a replacement copy of the tape after general release -- they can then buy a copy at the lower price, and rent it out without any additional payment to the studio. There are no release windows for DVDs. Studios price them low knowing that they will not be able to extract a premium from rental stores, but more than make it up on increased volume. More DVD revenues now come from Wal-Mart than from Blockbuster, the opposite of the situation with VHS. Rental DVDs are a different matter entirely -- the stores pay nothing up front, and a percentage of revenues. (Percentage pricing is also moving to VHS, but it was unheard of ten years ago. And VHS is dying anyway.)  |  IP: Logged Frank Angel Film God Posts: 5305 From: Brooklyn NY USA Registered: Dec 1999 posted 02-08-2006 09:45 AM                        Tao is right. You buy it, it's yours. The copyright law does not provide for restriction on property sale. You can sell it, rent it, give it away if you like -- it is not a copyright issue. I think you can even show it to some magic number (10?) friends and relatives before it becomes an exhibition issue. Now would the studios LIKE to get a piece of very sale and every rental that subsequent buyers make, sure, but sometime, albeit very infrequently, they don't get what they want. Like when Universal and Disney went to court to prevent Sony from manufacturing Beta VCRs -- the studios said they were nothing but evil things whose only purpose was to steal the studios' movies off tv. They were laughted out of court. Insiders said the real reason behind this suit was to put a stumbling block, even if it was just a delaying tactic, in the way of the VCR rollout because Universal/MCA was poised to release their Laserdisc format. Disney went along because, well, it's their nature to want to rule the world. There was the case were Disney (I think) tried to get the courts to let them get a percentage of all concession grosses. They argued that no one is coming to the theatre to eat popcorn and natchos. They are coming to see the movie and so any concessions sale is only a direct result of the film engagement. Lucky for the exhibitors, they lost that one (althought I thought it was a semi-valid argument). [ 02-09-2006, 03:55 PM: Message edited by: Frank Angel ]  |  IP: Logged Mitchell Dvoskin Phenomenal Film Handler Posts: 1869 From: West Milford, NJ, USA Registered: Jan 2001 posted 02-08-2006 11:46 AM                     You can sell it, rent it, give it away if you like -- it is not a copyright issue. Actually, there is a separate law the makes it illegal (in the USA) to rent recorded music and computer software unless specifically licensed to do so. I suppose that an argument could be made that DVD's and games are software, but nobody has pushed that point in court to my knowledge.  |  IP: Logged Tao Yue Expert Film Handler Posts: 209 From: Princeton, NJ Registered: Apr 2001 posted 02-09-2006 02:20 AM                        Indeed, this is why software is usually "licensed" instead of sold. Selling is subject to First-Sale, licensing is not. Music has been subject to special rights agencies for decades. The video industry had their chance to do something similar to ASCAP and the various rights agencies -- Sony was perfectly willing to negotiate a royalty fee for blank videotapes, but Universal slapped them with a lawsuit instead. Having won the case, Sony was in no mood to accomodate Universal anymore. By the way, Universal was not "laughed out of court." They came within one vote of winning -- the Betamax case was decided 5-4 by the Supreme Court. (Something to think about -- recently-retired Justice O'Connor, as frequently happened with 5-4 decisions, was in the majority.)  |  IP: Logged Dave Williams Wet nipple scene Posts: 1836 From: Salt Lake City, UT, USA Registered: Jan 2000 posted 02-10-2006 10:49 PM                        HERE IS THE ANSWER YOU HAVE ALL BEEN WAITING FOR!!!! I can answer the questions on how video stores do what they do, and how studios get their money!!! As a former upper up for a large video rental chain, and having dealt with studios and distributors, I can tell you to some degree of certainty how this all worked, and how it works now. Back in the day, VHS was rarely released for sale. Movie studios sold rental only copies to rental stores for prices ranging from 52 dollars to 107 dollars, depending on how many you purchased, and how good you are at negotiating terms. Pulp Fiction went for 72 dollars a pop, unless you were good and could get it to 53 dollars because you purchased 3500 copies of the thing. Video Rental stores had the liscence to do whatever they wanted with them at that time. Rent em, sell em, whatever. So that you get a better picture, Pulp Ficton was at the time the single highest selling rental video, at 700 thousand copies by release date. Thats 45 million in revenue to the studio. Big money! As more and more films were released for sale the same day it was released for rental, video stores purchased them the same way, at wholesale cost. One of the first big ones was Ace Ventura. It was released for sale and rental at the same time. You could buy it for 15 dollars, or rent it for 3 dollars. Rental stores purchased it for around 9 dollars, and were allowed to either rent or sell them. Now studios will actually supply the DVD's to rental stores for nothing at all. That's right.. NOTHING! Well nothing except for 50% of the take. And they get to access all of your rental records as well. This helps studios see what is renting, what sells, etc. It also allows them to supply 2 dollars worth of disk for half the take. The average disk will net more in rental than if they had sold it to the location. The location gets better control of thier cash reserves by not shelling out money for disks. They can also stock a hundred of a top title without any investment at all. They also get to sell the discs off after a set time, and once again get half the take. Have you ever seen "guaranteed to be there" or your next rental is free, or some other kind of deal? This is underwritten by the distributor to provide enough copies based on your actual store revenue figures to cover it. If it isn't in stock and the store has to hand out a free rental, they are credited for the loss on thier invoice. Small mom and pop locations cannot take advantage of this deal however. It is controlled by exclusive arrangments held by larger rental chains, ie. blockbuster, hollywood, etc. So studios do get a cut of rental figures depending on the release and the deal they cut with the big boys. If the picture is huge, they are less willing to throw the disks at them, and if the film is a flop, more so. That is the nuts and bolts of it. I quit the business because I really did get tired of watching 15 movies a week to make buying decisions. Oh the many nightmares I have of watching real winners like "Idle Hands". There are some good ones, like "Apex" if you can find it. Great indie sci fi flick that found a pretty good rental audience. Ciao Dave  |  IP: Logged

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