Captain Obvious: UMD price drop brings huge sales
by Joystiq Staff 
{ Sep 6th 2006 at 3:55PM }
After taking a few weeks off, Captain Obvious is back with some news on the recent Warner Bros. UMD movie price drop in Japan -- you see they dropped their little movies to 980 yen or about $8.50 for us Yanks -- and listen, it's positive. Well, it depends on how you define positive.After UMD movie sales seemed to suffer over the past few months, the peeps at Warner Bros. decided to run a promotion where for a "limited time," their movies would be available for that low price your 'Cap mentioned above. Apparently, in Japan, limited time means forever, as Warner Bros. decided to make that price drop permanent. The result? An increase in sales that boomed to ten times past previous sales numbers.
Now, what does the Captain have to do to get the U.S. some UMD price drop love? We'd like to call out to other studios and demand a price drop ASAP! What do you have to lose?
Reader Comments (Page 1 of 1)
LaughingTarget @ Sep 6th 2006 3:58PM
Probably doing this to clear out excess stock before getting out of the UMD market all together. That is usually what happens when an entire product line goes into a fire sale mode like this.
OtakuCODE @ Sep 6th 2006 4:07PM
Obvious? Certainly to us consumers, but not at all to the industry. Look at EA. They keep raising their price, and their sales go up too... but they've not realized their sales would be many, many times their current level if they'd drop prices rather than raise them.
The only case where raising the price actually increases your sales is a rare case where you have something extra... like the iPods cultish smugness, or Nike's teen status symbol ranking.
The $500/plate dinners in chic Manhattan restaurants don't contain food hewn from gold leaf and platinum chips, they're selling the ambience and exclusivity. For a mass-market product like movies or games, this almost never can be attained.
White Rose Duelist @ Sep 6th 2006 4:03PM
I love how the link puts a positive spin on this, when it probably means that Warner Bros is going to drop the format altogether and they just want rid of the stock.
Allen @ Sep 10th 2006 8:48PM
Must be a really elastic curve...
exy @ Sep 6th 2006 4:06PM
Obviosly the people of at Netjak have spent too much time together, since they are competing for the same thoughts.
LaughingTarget won this battle by two stars.
darryl @ Sep 6th 2006 4:17PM
Makes sense... that's what they need to do here. They UMD movies were doomed from the start because of their silly price. I would much rather buy rip and transcode a DVD than pay for the same movie twice.
If they did drop the price to ~$10 then I would probably buy movies on UMD simply to avoid the lengthy transcoding process.
Pip @ Sep 6th 2006 4:17PM
Like UMD, they will have sell the HD-DVD and Blu_ray movies for $5-10 before those begin to sell as well.
Flit @ Sep 6th 2006 4:45PM
The only way I'll ever own a UMD is if someone gives me one. It's not worth the little screen I can watch it on. Maybe, and only MAYBE if they had a sony dvd player with a umd slot would I even buy it for $8.50.
White Rose Duelist @ Sep 6th 2006 4:30PM
You think we're competing with each other for stars? Just wait til you see what happens once we've collected 100 of them... we're over 1/3 of the way there!
josh @ Sep 6th 2006 4:40PM
"The only case where raising the price actually increases your sales is a rare case where you have something extra... like the iPods cultish smugness"
That's all they have extra? Until the recent launch of the Gigabeat S, and now the new Zen Vision:M 60, the iPod was the ONLY mp3 player with a small form factor that held 60 GB (there were other players that were 60GB+ but not really pocket sized). I would say 30 GB is worth paying a bit extra for, and that isn't just smugness talking - I have a big mp3 collection, the extra 30 GB was really vital to me. I actually always said I'd never buy a MP3 player until I could get 50 GB in my pocket, because i like to have most of my music + a nice selection of audiobooks and podcasts loaded up. The iPod 60 was the first player to do that. Had the Creative Vision:M launched with a 60 GB model, I might have gotten that, but they waited almost a year before releasing a 60 gb version, for some reason.
Of course, now that there is 60 GB competition, if Apple doesn't upgrade their line up, or drop prices, that could be considered cultish/smug... but I doubt it will happen. There will be a new 80 GB ipod, or the price will drop, or the competition's sales will rise.
Robotic House Plant @ Sep 6th 2006 6:14PM
UMD movies should have never been above $9 from the beginning. That they were offering mostly existing catalog titles with no bonus content was an initial misstep.
This should have been corrected, but curiously it never happened in America. Instead retailers have been dropping the format. It's doubtful they'll pick it up again, especially now that two new formats have launched, vying for shelf space.
exy @ Sep 6th 2006 4:41PM
When the Netjack fellows collect 100 stars, the road to the mystic castle shall show clear. The final battle between the heroes of Netjak and the the evil Theif-King Banondorf awaits!
At 100 stars, the four commenters from Netjak will form into a large super robot and... comment some more.
Will Joystiq put up a banner for your site?
GSI @ Sep 6th 2006 4:43PM
The UMD movies should have been $10-15 from day one in the first place.
I'm with Pip on what he said...I'd (would have) bought them if they were cheaper.
I say "would have" b/c I'm slowly selling my PSP to a friend.
Jake @ Sep 6th 2006 5:02PM
Personally, I think this is bad news for UMD. If they can actually turn profit on a UMD at $9, then the format is better than I thought. Likely, though, this is the beginning of the end for UMD, at least for Warner Bros. movies.
counter @ Sep 6th 2006 5:26PM
Not obvious at all. The Captain is ashamed.
People aren't willing to pay full price for an essentially PSP-only disc.
Is it:
a) People don't have a need for a PSP-only disc
b) People weren't willing to pay full price.
That there's demand an order of magnitude higher for $10 UMDs is actually pretty surprising.
Jake @ Sep 6th 2006 4:53PM
"7. You think we're competing with each other for stars? Just wait til you see what happens once we've collected 100 of them... we're over 1/3 of the way there!"
Do you get a 1up?
White Rose Duelist @ Sep 6th 2006 4:53PM
The super robot thing was kind of close... whose gestalt Joystiq-star mecha do you think is keeping epobirs from unleashing a robeast army upon us?
Tom @ Sep 6th 2006 5:11PM
Arg your article is just as bad as Kotaku's. You need to point some things out. Firstly depending on what the profit margin is selling 10times more could still not be making up for it. Im not sure how much they cost before hand but say it was $20 and it costs $7.5 to make, distribute etc a umd (again i have not idea how much they cost to make). That would mean they went from making a profit of $11.5 to $10.
Also saying they have sold 10times more tells us nothing at all. If they were selling 10 and then they sold 10 times more thats still only 90umds more. Even if they were selling 1000 and then it became 10000 thats not a huge increase. Whereas if they were selling 50000 and it became 10times more then its something impressive.
I have to say though even at $8.5 i still wouldn't buy UMDs. When dvds are on sale they are often only slightly more expensive than that. That includes double disc sets as well which have lots of extras and can be watched on tv without the need for extra equipment. I imagine transfer and audio is also better as well.
It would be nice to know how much it costs to put a movie onto UMD though and also how much 10times more actually is.
exy @ Sep 6th 2006 5:12PM
I have a feeling epobirs is restrained not by such robotic avatars, but only by his own imperious regality.
It's good to be the king... of stars.
Evorgleb @ Sep 28th 2006 6:29PM
the UMD format for movies was pretty stupid to bigin with. Why would i want to pay all that money for a movie i can only watch on a PSP?
Madd Gamer @ Sep 7th 2006 3:36PM
Price can make a product just as attractive as it's purpose/performance level. I don't know how Sony thought that those UMD's could sell at the same price as DVD's. Picture me dissing my big ol' 32 inch so that i can strain my eyes on that little screen. Pardon me but i just figured, in a case like this, mini discs should come with a mini price.
Not only that, people are downloading movies straight off of the internet and onto their PC's like madd now. From there, all you need is the conversion software to upload it onto your PSP. How hard is that?
So I wouldn't care if they lowered the price of UMD's to $5 now, I'm still going to pass. Sony had their chance to impress me with their UMD-movie-crap. But they failed miserably by tacking on unrealistic prices for their blasted little discs. And now that they're facing a major stock pile-up, Sony wants to lower their prices??!! A little late, maybe?? HELLLLOOOOO.. More attention to the consumers and less attention to the competition, Sony!
Nmaster @ Sep 6th 2006 6:20PM
As an economics minor, trust me when I say: "when price goes down, sales go up".
I even have charts to prove it...
AK @ Sep 6th 2006 6:26PM
Even at $8.50, they still aren't worth the shelf space they take up. It's a very niche market. Half the people that own psp's, buy new games for it, and on top of that, a quarter of those buy movies for it. With two new consoles coming out in november, plus the growing 360 game library, stores can't afford to cut into shelf space like that. Factor in also HD-DVD and Blu-Ray discs, stores cant have that many different formats on the floor at one time. You can't keep adding in multiple formats, and expecting retailers to accomodate accordingly. Electronics departments don't grow in size with every new format released. With every new format released, something else has to get downsized.
UMD movies are being reduced to cardboard displays, placed in a ramdom locations on salesfloors. The market just isn't there, and there are too many other things on the horizon. I would give them 2 more years tops, before there are fazed out altogether, or reduced to bargain bins in the back of stores.
Xel @ Sep 6th 2006 6:58PM
They should be 5 bucks.
32_footsteps @ Sep 6th 2006 8:23PM
My God... Netjak's full of stars...
Joystiq doesn't really need to carry a banner for us. The link to us often enough, and every single page has at least four different links to the site (on the Top Contributors list). We're plenty satisfied with that. Until the global takeover, of course.
As for this announcement, I do wonder about it. On one hand, my fellow Netjakers could be right in that it's simply an inventory-clearing maneuver. However, if WB is still able to profit on that reduced price, it would be worth it for them to stay with the format for a bit longer. After all, as we've all suspected for ages, the key is to charge signifigantly than a DVD for an inferior version of the movie in order to sell it.
alienclay @ Sep 7th 2006 12:10AM
remember when it used to cost $9 for a box of frosted flakes?
then everybody in the cereal biz realized that that price was too high and not reallly hitting that economic sweet spot to achive max profit and cut the price in half. there are other breakfast foods out there.
10x the number of discs sold is a BIG deal. , 3 maybe even 4X,... no biggie. but 10!
and the mivie companys don't get the lions share of the profit in that 19.95 the store does. but if there was a umd increase of moving product across the board.... well, all i have to say is the obvious. do this everywhere and umd may have real hope afterall.
ReaktorLeak @ Sep 7th 2006 2:15AM
The profit margins on Disc Media are incredibly high. You really think that $20 DVD movie you just bought costs even half that much to manufacture?
UMDs discs cost slightly less to make than DVDs (smaller, same idea) which puts it in the ballpark arena of 30 cents. The packaging costs a lot more than the disc (instruction manual, cover flap, plastic for the flap, and the case itself).
So a UMD Movie/PSP title costs around 3~4 dollars to manufacture (depends on extraneous materials). That's 4~5 dollars of profit for the movie studio and 2 dollars of profit for the retailer. Sell at the high volumes shown by the article and the studios end up making more profit than they would've when they sold UMDs at $20~25.
Sony's putting pricing regulations on movie studios (deregulation obviously didn't work and the studios got greedy) and trying to relaunch UMD movies. It won't be easy, but they're determined to keep the format going Outside of the market it was originally intended for: GAMING.
The format hasn't failed; the fact that every PSP title sold (of which there are way over 100 million) is pressed onto a UMD disc. Royalties up the ass.
Blu-ray's a little different since Sony didn't invent the format, but are a member of the Blu-ray Association. They get a slight cut, but so do the 14 other major companies involved as well.
32_Footsteps @ Sep 7th 2006 9:48AM
"The format hasn't failed; the fact that every PSP title sold (of which there are way over 100 million) is pressed onto a UMD disc. Royalties up the ass."
Look, I know the numbers I can find are a little out of date (as of June 30, 2006), but according to what I've found, Sony only has shipped 56 million units of software (which includes UMD movies) for the system. While I'm sure that number is higher now, I truly doubt Sony has shipped and sold an additional 44 million units of software in the last two months.
Also, let's look at the well-known "21 million shipped" number, which is from around the same time. Even if Sony sold all units in question, they're dealing with a 2.5 software units per hardware unit. That's pitiful and is a poor performance overall.
Sony isn't getting nearly the royalties you claim.
Garaputo @ Sep 7th 2006 2:30PM
I always thought that maybe UMD movies should have been sold bundled with the DVD of the same title, maybe for a $5 premium or something (I'm no sales guru, so feel free to come up with something better cost-wise), so when you buy, say, Spiderman 2 on DVD you also get an extra copy in the package on UMD as well. I'd have a TON of UMD movies if they were sold that way.